Yes, that's no doubt that's true. Within 48 hours of receiving the complaint in the lawsuit, Ackman published a letter to the shareholders of Pershing Square, saying that he was going to offer this SPARC as an alternative.
The problem legally for him and Pershing Square is that if, in fact, a court determines that he's been operating that SPAC as an investment company for the preceding 12 to 18 months, then it's kind of too late. You know, he would already have violated the 40 Act. So there's not much you can do just to navigate around that.
But certainly going forward. It's a model that maybe he and others will try to adopt. What the SPARC does that's different from a SPAC is it doesn't ask for all the cash upfront. So the way a SPAC typically works, as the SPAC will go public, and the sponsors running the SPAC will receive and raise -- however many millions, hundreds of millions or billions of dollars they want at the IPO. And then they'll keep that war chest for however long they need until they consummate the merger.
What a SPARC proposes to do instead is to say, "listen, we will get promises from you, all you investors, [but] we won't actually take custody of your cash until we need it ... until we actually have the merger in mind."
And there's a couple of issues for Ackman. I think it's possible that that will skirt the definition of investment company. And so it will avoid the problems of a lawsuit like this.
The problem though, is it's a brand new model. So the SPARC model has not been used. And it hasn't, more importantly, it hasn't received SEC approval. So what he's proposing to do is a new model, and he doesn't have approval for it yet. And if you think that all of this kerfuffle is attracting attention from the SEC, and now he needs SEC approval for this new model, you know, there's a high risk that he won't get it.
So the SPARC idea so far is just one idea by Ackman, and it's not at all an industry standard, and it hasn't received any formal approval.