Ackman SPAC will need new law to defeat investors: suit

Bill Ackman's Pershing Square Tontine Holdings Ltd. will need a new law to defeat investors claims that it is illegally operating, George Assad, who sued the SPAC, said in a court filing Monday.

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Assad asked the judge to deny Ackman's request that the suit be thrown out.

The suit could have wide-ranging implications for the financial industry if a judge decides that SPACs are more generally being regarded as investment companies subject to the 1940 Investment Company Act, which requires registration with the Securities Exchange Commission and places restrictions on fees charged for investment advice.

Defendants can't cite any authority in which the SEC or the courts have knowingly permitted a redemption of a pool of securities comprising 100% of its assets with no operations business for two and a half years without becoming an investment company, Assad said in the filing.

The filing states that PSTH is the world's biggest SPAC, having sold 200 million IPO units for $20 each. The Blank-check company abandoned plans for a deal with Universal Music Group and still has no operations or business, according to the filing.

Ackman denied Assad's claims after the lawsuit was filed in August.

Ackman said that PSTH has never held investment securities that would require it to be registered under the Act and does not intend to do so in the future. We believe that this litigation is without merit. He urged the judge to throw out the lawsuit last month.

The case is Assad v. Pershing Square Tontine Holdings, Ltd. 21 cv 06907, U.S. District Court, Southern District of New York Manhattan None Wildfires Are Worse and One Chemical Company is Reaping the Benefits