The Securities and Exchange Commission (SEC) issued a warning on Wednesday against celebrity-backed special purpose buyout companies (SPAC), urging investors to think twice.

"Celebrity participation in SPAC does not mean that one or more specific SPAC investments are suitable for all investors," the SEC said in an investor warning posted on its website.

Celebrities, like others, may be tempted to participate in venture capital, or may be better able to withstand the risk of losses. Don't buy SPAC shares because of endorsements from Hollywood actors, professional athletes and famous musicians."it's not a good idea to invest in SPAC just because a famous sponsor or investor says it's a good investment."

SEC did not disclose the names of celebrities. But the explosive popularity of the SPAC market has attracted a large number of athletes and other celebrities to join the trend. NBA star Shaquille O'Neill advises Forest Road, which last month announced a three-way merger with fitness company BeachBody. Musician Siara Wilson (Ciara Wilson) is a director of Bright Lights Acquisition, which targets a company in the media and entertainment industries. Former MLB star Alex Rodriguez recently launched his own SPAC.

SPAC raises money through IPO and then uses the money to merge and list with a private company, usually within two years. According to SPAC Research's data,This year's issuance continues at a record pace, raising more than $77 billion in the first quarter of 2021 alone, on a par with the full year of 2020.

SEC says investors should do their own research before investing in SPAC. These deals are considered riskier than traditional IPO because they tend to come with no business.

"never invest in SPAC based solely on the participation of celebrities or other information you get through social media, investment newsletters, online advertising, email, investment research sites, Internet chat rooms, direct mail, newspapers, magazines, television or radio," SEC warned.

American financial mogul Jim Kramer has previously warned against these celebrity ads:

"these new SPAC are more and more like internal jokes of the super-rich and a way for celebrities to make money from their fame."

"believe me, you don't want to spend your money on other people's internal jokes, so keep in mind that the way to prevent losses is to do some research on people and the company before you get close to these things."