What regulatory or compliance risks are associated with the SPAC transaction?

Regulatory / compliance risks

The AI Infrastructure Acquisition Corp. SPAC is still in the SEC filing stage (Form S‑1). Until the registration statement is declared effective, the offering remains vulnerable to SEC comments that can delay or reshape the IPO. Typical red‑flags include: (1) adequacy of forward‑looking statements about the AI‑GPU market, (2) disclosure of any material relationships between Jet.AI, AIIA Sponsor Ltd., and the SPAC’s management, and (3) the completeness of the sponsor’s capital‑contribution agreement and the valuation of the contribution. Any material amendment required by the SEC could push back the pricing date, increase underwriting costs, or even force a re‑pricing of the units.

Beyond the initial filing, SPACs face heightened post‑IPO scrutiny on (a) the timing and fairness of the business combination, (b) shareholder approval procedures, and (c) compliance with the “no‑seller‑disclosure” rule that limits the sponsor’s ability to sell its private‑placement warrants after the deal closes. If the combination with Jet.AI or a related entity is perceived as preferential or inadequately disclosed, the SEC could launch an enforcement action, and state securities regulators may also intervene. Finally, the sponsor’s capital contribution must satisfy the “use‑of‑proceeds” covenants in the prospectus; any deviation could trigger breach‑of‑contract claims from unit holders and expose the sponsor to civil liability.

Trading implications

Given these compliance uncertainties, the SPAC’s equity (and related warrants) may experience heightened volatility in the weeks leading up to the S‑1 effectiveness and the shareholder vote. Technical indicators (e.g., a tight Bollinger‑Band contraction around the current price) suggest that a breakout—upward on news of an SEC clearance, downward on a delay—could be swift. Long‑short positions should be sized conservatively: consider a modest long on the SPAC if the S‑1 is declared effective without major comments, paired with a protective stop near the recent low, while maintaining a short or put spread as a hedge against a potential SEC hold‑up or adverse shareholder vote. Monitoring SEC comment letters, sponsor‑related insider filings, and any news on Jet.AI’s own earnings will be critical to adjust exposure in real time.