BOSTON - Billionaire hedge fund manager William Ackman said his blank check company is not an investment firm that needs to register with U.S. regulators, pushing back against an investor's suit alleging that his Pershing Square Tontine Holdings has improperly invested in securities.
Ackman has never held investment securities that would require it to be registered under the Act and does not intend to do so in future, PSTH said in a statement referring to the Investment Company Act of 1940 and the Investment Advisers Act of 1940, longstanding market regulatory laws.
We believe this case is total without merit, Ackman added.
The lawsuit contends that Ackman's special purpose acquisition company acted all along as an investment company rather than an SPAC exempt from the registration requirement.
The lawsuit was filed on Monday in U.S. Federal Court by George Assad, an investor in the SPAC. The suit states: Investing in securities is basically the only thing that PSTH has ever done. SPACs are meant to merge with public firms and then take them private.
Ackman bought 7.1% of his company vivendi-sells - 71-part-in-investment across his hedge funds from the french conglomerate Vivendi and pledged to keep buying after his original plan to have his SPAC acquire a 10% stake in the record label collapsed.
Ackman's SPAC originally announced the plan to buy 10% of Universal Music Group at a time when it was already taken public by Vivendi. In July, Ackman scrapped the SPAC deal, saying that his hedge funds would inflate and not the New York Stock Exchange would now invest in Universal Music Group, amid growing concerns among regulators that the deal wouldn't meet the blank checks.
He initially planned his SPAC to distribute the Universal Music Group shares to its investors after it listing in Amsterdam next month.
Ackman's SPAC was the largest that was raised in his lifetime and the lawsuit will position him against John Morley, a Yale professor and former SEC commissioner, who will be arguing the case along with law professor Robert Jackson.
Ackman said that his SPAC has owned treasuries and money market funds like all others.
The lawsuit suggests that investors and regulators are taking a much closer look at blank check companies that have been launched by Hollywood financiers as well as Wall Street celebrities and have boomed in popularity.