erit serious consideration. Perhaps more than the monetary penalties imposed, the undertakings potentially have systemic and long-lasting impacts on these audit firms' operating structure. Such fundamental and lasting changes are likely to impact the auditors far more significantly than the one-time financial penalties imposed.It goes without saying that auditors would be well advised to keep their antennae up when it comes to increased enforcement activity, particularly when it comes to audits involving SPACs.Notes The SEC has used inexperienced and insufficient staffing as a basis for charges in other enforcement cases against auditors in the past. See, e.g., here, here and here. 17 CFR § 210.2-02(b)(1). 15 U.S.C. § 78d–3; 17 CFR § 201.102(e)(1)(ii) and (iv). This order and the 38-page order in the earlier matter are recommended reading for auditors working with SPACs or startup company clients with limited operating history. 15 U.S.C. § 78m; 17 C.F.R. § 240.13a-19. 15 U.S.C. § 78n; 17 C.F.R. § 240.14a-9.

The SEC does not hesitate to apply its own views as to the adequacy of the aerospace engineering aspects of the Mission.[14] 15 U.S.C. § 77q(a)(3).[15] 15 U.S.C. § 78n(a).[16] 17 C.F.R. § 240.14a-9.[17] Momentus Order, supra note 1, ¶ 63.[18] 15 U.S.C. § 77g(b)(3) defines a “blank check company” as a development stage company that issues penny stock, as defined under 15 U.S.C. 78c(a)(51), either (A) has “no specific business plan or purpose,” or (B) indicates its business plan is to merge with an unidentified company or companies.”[19] 15 U.S.C. § 77g(b)(1) requires the SEC to prescribe special rules concerning registration statements for blank check offerings.

Believing that the company was being undervalued, and that the proxy statement was false and misleading, a number of shareholders brought suit. They ultimately alleged violations of SEC Rule 14a-9, which prohibits any statement in a proxy statement that “is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading.” 17 C.F.R. §240.14a-9(a). The district court granted the defendants’ motion to dismiss, holding that the plaintiff shareholders had failed to plead any actionable misrepresentation or omission.

While much more can and will be written on the subject, the foregoing is intended to provide a glimpse of what is likely to come.https://markets.businessinsider.com/news/stocks/spac-investing-strategies-risks-expert-advice-commentary-analysis-2021-3-1030229612.https://www.nytimes.com/2021/02/10/business/dealbook/spac-wall-street-deals.html.https://hbr.org/2021/02/the-spac-bubble-is-about-to-burst.https://www.sec.gov/news/public-statement/spacs-ipos-liability-risk-under-securities-laws. See, e.g., 17 CFR § 240.14a-9. Rule 14a-9 contains one of the most popular bases for plaintiffs’ allegations in a securities fraud case: Nosolicitationsubject to this regulation shall be made by means of anyproxy statement, form ofproxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to anymaterialfact, or which omits to state anymaterialfact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to thesolicitationof aproxyfor the same meeting or subject matter which has become false or misleading.https://www.sec.gov/news/public-statement/spacs-ipos-liability-risk-under-securities-laws.Id. 15 U.S. C § 78u–5(c)(1).https://www.bloombergquint.com/gadfly/why-chamath-palihapitiya-loves-spacs-so-much.https://www.sec.gov/news/public-statement/spacs-ipos-liability-risk-unde

irements as well as its safe harbor provision shielding companies from liability over certain forward-looking statements and projections.Over the past several years, lawsuits challenging mergers have been filed with increasing frequency in federal courts under Section 14(a) and Securities & Exchange Commission Rule 14a-9(a) promulgated thereunder. That rule provides:No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.17 C.F.R. § 240.14a-9(a).Here, plaintiff alleged that four material omissions from the Tesco proxy statement rendered it misleading: (1) projections of unlevered free cash flows for 2017 through 2022; (2) projections for revenue, EBITDA and other metrics for 2019 and beyond; (3) “Growth Case” projections relating to per share equity value ranges; and (4) details from the transactions analysis that J.P. Morgan Securities LLC conducted before concluding that the deal was fair. Plaintiff alleged that these omissions created an “unduly pessimistic view of Tesco’s future growth potential.”

17 CFR 240.14a-1(l).See, e.g., 17 CFR 240.14a-2(b)(1) (providing an exemption, subject to certain conditions, for any solicitation by or on behalf of any person who does not, at any time during such solicitation, seek directly or indirectly, either on its own or another's behalf, the power to act as a proxy for a security holder and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent or authorization) and 17 CFR 240.14a-2(b)(3) (providing an exemption, subject to certain conditions, for the furnishing of proxy voting advice by any person to another person with whom a business relationship exists).See Statement of Chairman Clayton; Statement of Commissioner Roisman.See Statement of Chairman Clayton.See 17 CFR 240.14a-9.[View source.]

Third, plaintiffs alleged that defendants made false projections regarding the company’s business conditions in violation of Section 10(b) and Rule 10b-5. Fourth, plaintiffs alleged that the defendants made false statements regarding stock option practices in Jabil’s proxy statements in violation of Section 14(a) of the 1934 Act, 15 U.S.C. § 78n(a), and Rule 14a-9, 17 C.F.R. § 240.14a-9, promulgated thereunder. Fifth, plaintiffs alleged that the individual defendants were liable as controlling persons of Jabil under Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a).