Holding cash and government securities while seeking a business combination does not make PSTH or other SPACs illegal investment companies.

This is a legal claim. Judge it as of 19 August 2021, using the law and authority then existing, together with any later court ruling in the Assad v. Pershing Square Tontine Holdings litigation that decided this question for PSTH. TRUE: the Investment Company Act, SEC rules and guidance, and court decisions support the position that a SPAC holding cash and government securities while it seeks a business combination is not thereby an investment company, and no court or the SEC held otherwise for PSTH; broad expert consensus (such as the joint statement by numerous law firms) also counts in support. MOSTLY TRUE: that position was the prevailing view, but with recognised caveats (for example duration of the search or other facts-and-circumstances factors) that the claim's categorical wording passes over. MOSTLY FALSE: the question was genuinely unsettled or depended on the facts, so the categorical claim (for PSTH and for 'hundreds' of SPACs) is overstated, without any authority holding the opposite. FALSE: a court or the SEC determined that holding such assets while seeking a combination does make PSTH, or SPACs generally, investment companies.

Set before the research began.

1. E1 New Lawsuits Alleging That SPACs Are Unregistered Investment Companies Face Significant Hurdles Paul, Weiss (client memo) · 30 August 2021

   “Courts may approach the plaintiff’s ICA allegations with some skepticism in view of the fact that it is a longstanding view of practitioners and the SEC that temporarily investing in treasuries and qualified money market funds does not turn an entity into an investment company under the ICA.”

2. E2 New Lawsuits Alleging That SPACs Are Unregistered Investment Companies Face Significant Hurdles Paul, Weiss (client memo) · 30 August 2021

   “A critical threshold issue is whether the SPACs are investment companies under the ICA, which courts do not appear to have addressed.”

3. E3 New Lawsuits Alleging That SPACs Are Unregistered Investment Companies Face Significant Hurdles Paul, Weiss (client memo) · 30 August 2021

   “Although each of the SPACs in the three lawsuits to date appear to have been invested in government securities and money market funds for more than a year, other SPACs may be able to avoid liability if they consummate an acquisition within one year.”

4. E4 Lawsuits Targeting SPACs as Unregistered Investment Companies Goodwin (law firm publication) · 9 September 2021

   “Of the more than 1,000 SPAC IPOs that have been reviewed by the SEC over the past two decades, none has been deemed to be subject to the ICA.”

Two independent law-firm sources support Ackman's position: Paul, Weiss calls it a longstanding view of practitioners and the SEC (E1), and Goodwin reports that none of the more than 1,000 SPAC IPOs reviewed by the SEC has been deemed subject to the ICA (E4). Paul, Weiss calls it a longstanding view of practitioners and the SEC that temporarily investing in treasuries and qualified money market funds does not make an entity an investment company (E1). Goodwin reports that none of the more than 1,000 SPAC IPOs the SEC reviewed was deemed subject to the Investment Company Act (E4). However, Paul, Weiss also says courts do not appear to have addressed the question (E2). It notes a caveat about timing: SPACs that complete an acquisition within one year may be able to avoid liability, while the SPACs in the lawsuits appear to have held such investments for more than a year (E3). The evidence includes no court or SEC ruling against PSTH, so the claim matches the prevailing view but its categorical wording passes over these recognised fact-dependent caveats.