U.S. lawmakers are ramping up scrutiny of special purpose acquisition companies, or SPACs, with a hearing set for Monday as they consider legislation aimed at curbing liability protections for the industry. The U.S. Securities and Exchange Commission (SEC) has heightened its focus on SPACs in recent months through a series of public statements, new guidance and a Wall Street bank inquiry led by the agency"s enforcement team. Republican Senator John Kennedy from Louisiana last month introduced a bill aimed at boosting transparency for investors in SPACs. SPACs are shell companies that raise money via a listing to acquire a private company with the purpose of taking it public, sidestepping a traditional initial public offering (IPO) process. Critics say banks and SPAC sponsors have reaped big payoffs at a cost to later-stage investors. Monday"s hearing in a House Financial Services subcommittee is aimed at SPACs, direct listings and IPOs, according to a hearing notice published on May 19. The House is considering legislation that would redefine "blank check company" from a key 1995 law to include special purpose acquisition companies, according to the notice. The law created a safe harbor that protects listed companies from shareholder litigation provided forward-looking statements are made in good faith, identified as such and couched in cautionary language. The safe harbor does not protect IPOs or certain blank check companies, but sponsors have generally operated on the basis that it does apply to SPAC deals, and have leaned on it heavily to issue growth projections. The SEC has been mulling guidance that would curb these projections, Reuters reported earlier this month. read more The prospects for the bill to become law are unclear, but it signals growing Congressional attention on the industry. Our Standards: The Thomson Reuters Trust Principles.