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FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst
(Reuters) – The U.S. Securities and Exchange Commission (SEC) cautioned investors on Wednesday about buying shares of so-called special purpose acquisition companies only because they are backed by celebrities, including movie stars and athletes.
Special purpose acquisition companies, or SPACs, are shell companies which raise funds to acquire a private entity with the aim of taking it public, allowing such companies to sidestep a traditional IPO to enter public markets.
The SEC said a celebrity