Blank-check companies that have raised tens of billions of dollars to acquire hot startups are under the microscope at the Securities and Exchange Commission.

Such companies, also called special-purpose acquisition companies, or SPACs, are shell-like entities that go public in order to raise cash for acquisitions. Startups can then combine with a SPAC to go public, in an alternative to a traditional initial public offering.

SEC Chairman Jay Clayton said Thursday that the regulator is examining how sponsors of blank-check companies disclose their ownership and how any compensation is tied to an acquisition. Investors buy shares in SPACs before the SPACs have done a deal, and they have the option to exit before a transaction is finalized.

One of the areas in the SPAC space Im particularly focused on, and my colleagues are particularly focused on, is the incentives and compensation to the SPAC sponsors, Mr. Clayton said in an interview on CNBC. How much of the equity do they have now? How much of the equity do they have at the time of the IPO-like transaction? What are their incentives?Mr. Claytons comments briefly caused a sharp selloff in the shares of SPACs and companies that have done SPAC transactions.Nikola Corp. , an electric-truck startup that went public through a SPAC deal this year and was recently thrown into turmoil by fraud allegations, fell as much as 24% in morning trading before paring its losses. Its shares closed 9.7% lower.

Shares of Tortoise Acquisition Corp., a SPAC that has announced but not yet closed a deal with electric- and hybrid-vehicle startup Hyliion Inc., dropped 26% after the opening bell. They were down 9.7% when markets closed.

Mr. Claytons comments were intended to communicate that regulators are closely reviewing SPAC written disclosures, a person familiar with the matter said. The SEC staff reviews thousands of public-company disclosures every year and offers written comments about them, with an eye toward enhancing disclosure for investors. Mr. Claytons remarks werent intended to signal the existence or possibility of enforcement action, the person said.

Nikola and sports-betting operator DraftKings Inc. are among the larger firms that went public this year though SPAC deals. Earlier this week, Nikolas founder stepped down as executive chairman after a short seller alleged he misled investors. Nikola and its founder, Trevor Milton, have denied the allegations of fraud.

This has been a record year for new SPAC listings. So far in 2020, IPOs of new blank-check companies have raised $41.2 billion, handily breaking last years haul of $13.5 billion, which was then a record, according to Dealogic.

After a SPAC goes public, the executives running it have a limited period of time, typically two years, in which to find a private company to merge with or acquire. The private company then gains the SPACs spot on an exchange, like in a reverse merger.

SPACs can be a healthy alternative to a traditional IPO, and the competition they offer to traditional stock offerings is probably a good thing, Mr. Clayton said.

New SPAC activity has surged this year as fallout from the coronavirus pandemic has created more opportunities for blank-check companies to find acquisition targets. SPACs have also grown in size as the structure has gained greater acceptance on Wall Street, attracting more prominent financiers and underwriters.

Among those who have started SPACs this year are hedge-fund billionaire William Ackman, whose blank-check company raised $4 billion in July in the largest-ever SPAC IPO. Other prominent figures who have disclosed plans to lead new SPACs in recent months include former House of Representatives Speaker Paul Ryan and Oakland Athletics executive Billy Beane, who was depicted in the film and book Moneyball.

Question I have : why SEC is particularly concerned about SPACs in 2020?