SPACs in a New Era

Welcome to The Rundown! Each week we'll identify and break down for you SPACs that are capturing market share and making an impact.

Happy Sunday, Friends!

The last week of SPACs was notable with landmark regulations being announced, lawsuits being settled with the SEC, deals being announced and several SPACs liquidating. Read on to find out the latest about all things SPACs.

SPAC News

SEC Makes Sweeping Changes to SPAC Rules

Under new U.S. Securities and Exchange Commission rules, U.S. SPACs and their acquisition targets will have increased legal responsibility for disclosing projected earnings and other important information.

The Commission, split 3-2, approved the proposal despite opposition from Republican members who feared it might limit a useful investment tool. Gary Gensler, the U.S. Securities and Exchange Commission chairman, stated that the new rules are intended to align SPACs more closely with traditional IPO regulations, emphasizing equal investor protections for both.

This move was part of DarkPulse's strategy to transition from the OTC market to the Nasdaq by merging with one of its own entities. Additionally, it imposes stricter requirements for disclosing SPAC sponsors' compensation, conflicts of interest, and risks of share value dilution. The final rule eliminates the initial proposal of a time frame for SPACs to complete mergers and the classification of some SPAC IPO participants as underwriters, opting instead to provide guidance on these issues.

The new regulations become effective 125 days post-publication in the federal register but SPACs listed before this can follow prior rules if they finalize acquisitions within this transition period.

$NSTB Settles With SEC Over Misrepresenting Its IPO, Will Liquidate

The SEC announced that Northern Star Investment II agreed to settle charges that it made misleading statements in forms filed with the SEC as part of its January 2021 IPO

While the SPAC announced plans to liquidate, it will continue as a corporate entity to seek a deal, an unusual move in the world of SPACs.

The SEC determined that Northern Star breached the Securities Act of 1933's antifraud provision, leading them to agree to a cease-and-desist order and a potential $1.5 million penalty if a merger occurs, without admitting or denying the findings.

The SEC's order revealed that Northern Star falsely claimed in its SEC filings to have had no discussions with potential target companies before its IPO. In reality, Northern Star had been in talks with a target company and its main shareholder since December 2020 about a possible SPAC merger.

Despite announcing a merger with Apex Clearing Holdings in February 2021, which was later canceled, Northern Star failed to fully disclose these discussions in their Form S-4 filings.

SPAC Deals Announced

$CLSM Strikes $200 Million Deal With AI-Startup Fusemachines

Fusemachines, an enterprise AI product company, is merging with CSLM Acquisition Corp in a $200 million deal.

Founded in 2013 by Nepal-born entrepreneur Sameer Maskey, New York-based Fusemachines has created AI solutions for notable clients like Time, otg, and Tapestry, owner of brands like Coach and Kate Spade.

Fusemachines initially worked with the City of New York, deploying thousands of chatbots, and has since expanded its training program to Latin America, with plans for southern India and underprivileged areas in the US.

So far, over 800 fellows have been trained, with more than a hundred currently in training, focusing on computer vision, natural language processing, and machine learning.

Maskey is introducing a generative AI specialization, a course he's already teaching at Columbia University, and Fusemachines is updating its older products with this technology. The startup, with a workforce of nearly 500 in Nepal and North America, has raised $10 million in seed funding from Future Perfect Ventures and Dolma Impact Fund.

SPAC Deal Updates

Investor Made $23 Million Off Insider Trading $DWAC

A Miami-based Russian-American businessman is suspected of earning nearly $23 million from alleged insider trading linked to former President Donald Trump's media company, as per federal court documents.

Anton Postolnikov, who owns a bank in the Caribbean, reportedly also loaned $8 million to Trump's media company. He is the nephew of a former high-ranking Russian official and a one-time staffer for President Vladimir Putin.

Postolnikov's involvement in insider trading was mentioned in a New York securities fraud case filed against three South Florida men last month. The indictment accuses them of earning around $23 million from insider trades involving Trump Media's merger with Digital World Acquisition Corp and sharing confidential information about the deal for profit.

Despite the SPAC's struggles, it ended the week at $38//share, up more than 50%, and briefly touching $56/share after Trump emerged as a frontrunner in the Republican Primaries.

Since its 2021 public debut, Digital World Acquisition has been pursuing a merger with Trump's Truth Social, but a deal remains uncertain with no imminent signs of completion. In September, investors granted the company a one-year extension to finalize the merger, with only nine months remaining to avoid returning the initial funds raised.

$GSD Terminates $145 Million DarkPulse Deal

SPAC Global Systems Dynamics said it had decided to mutually terminate its $145 million merger with DarkPulse.

The decision was made after DarkPulse received a notice that the SPAC would be delisted from the Nasdaq stock exchange, following its failure to conduct a shareholder meeting in 2022. DarkPulse is a developing company that uses advanced, patented laser-based monitoring systems to create essential technology for smart city operations.

DarkPulse, which is currently trading on the OTC market, acquired the sponsor's equity in Gladstone Acquisition in November 2022 and renamed it Global Systems Dynamics. This move was part of DarkPulse's strategy to transition from the OTC market to the Nasdaq by merging with one of its own entities.

Gladstone previously raised $100 million through its August 2021 Initial Public Offering and had planned to target a company in the agriculture technology industry, including farming-related operations and businesses that support the farming industry. Once Gladstone acquired the equity interest, it said it would merge with a company that complements its management team's background.