Securities Investigation – Talkspace Inc. (formerly known as Hudson Executive Investment Corporation)
The White Law Group is investigating potential securities claims involving broker dealers and financial advisors who may have unsuitably recommended Talkspace Inc. (f/k/a Hudson Executive Investment Corporation) to investors.
A special purpose acquisitions company (SPAC) such as Talkspace, Inc., (TALK) is basically a shell company set up by investors with the sole purpose of raising money through an IPO to eventually acquire another company.
How does a SPAC work?
These shell companies are typically formed by a group of institutional investors and money is raised through an initial public offering (IPO) and moved to an interest-bearing account until the acquisition can be made. When the shell company goes public, it is not certain which company it is seeking to acquire. The SPAC may have up to two years to identify a target company to acquire. After a target company has been decided upon, the acquisition must be approved by the SPAC’s shareholders through a vote.
After the acquisition, the shareholders may decide to either convert their shares of the SPAC into shares of the acquired company or redeem their shares and for the initial investment plus interest.
If the SPAC is unable to locate a target company within the two-year time period, the SPAC is liquidated, with all shareholders receiving their original investment back along with accrued interest.
Risks of SPACs
Like all investments, there are risks that come with investing in SPACs.
There is always the possibility that the target companies may have their acquisition rejected by SPAC shareholders. Another risk is that investors have zero knowledge of what exactly they are investing in.
Some reports say that the due diligence of the SPAC process is not as rigorous as a traditional IPO. Further, SPAC sponsors don’t have an incentive to avoid having the SPAC over pay for the company. While there have been some successes with a few high-profile SPACs, the average returns from SPAC mergers fell short of the average post-market return for investors from an IPO, according to one article.
Filing a Complaint against your Brokerage firm
If you are concerned about an investment in Talkspace Inc. (f/k/a Hudson Executive Investment Corporation), the securities attorneys at The White Law Group may be able to help you by filing a complaint against your brokerage firm. Please call the offices at 888-637-5510 for a free consultation with a securities attorney.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.
For more information on the firm, please visit https://www.whitesecuritieslaw.com.
To learn more please see: