111 Iowa L. Rev. 539 (2026)
Abstract
In this Article, we examine whether regulation is needed to protect investors in private equity. We do this by analyzing the performance of de-SPAC transactions that solicited private investment. These private investments in public equity are known as PIPEs. Because PIPE returns are publicly available, we are empirically able to determine whether the limited PIPE investors are getting a fair deal in these investments. We find that de-SPAC investors lose about forty-five percent of their investment within two years of the de-SPAC transactions. Furthermore, we find that almost all these losses are limited to those cases when the SPAC sponsors resort to PIPE financing, losing about fifty-five percent of their value abnormally. Hence, our evidence suggests that limited private-fund investors suffer substantial and systematic losses when they make PIPE investments in de-SPAC transactions. Our evidence at least partially justifies the SEC’s new rules regarding the regulation of the private funds industry. Moreover, the need to address this matter has become more urgent in light of the August 7, 2025, executive order further opening pension funds’ access to private equity markets, thus also exposing the retirement investments of retail investors to these risks.