US SEC sent inquiry letters to several Wall Street banks on their individual SPACs

25 Mar, 2021 23:01
source: Singularity Financial

Singularity Financial Hong Kong March 25, 2021 – The Securities and Exchange Commission (SEC) in recent days sent letters to Wall Street banks seeking information on their special purpose acquisition company, or SPAC, dealings, starting with Wall Street banks, Reuters reported on Thursday.

The SEC letters asked the banks to provide the information voluntarily and, as such, did not rise to the level of a formal investigative demand, two of the sources said.  Deal fees, volumes, internal controls and compliance are some of the information the SEC was seeking, it said.

However, one of those two people said letters were sent by the SEC’s enforcement division, suggesting they may be a precursor to a formal investigation.

SPACs are listed shell companies that raise funds to acquire a private company with the purpose of taking it public, allowing such targets to sidestep a traditional initial public offering.  SPACs have surged globally to a record $170 billion this year, outstripping last year’s total of $157 billion, Refinitiv data showed.

“The boom has been fueled in part by easy monetary conditions as central banks have pumped cash into pandemic-hit economies, while the SPAC structure provides startups with an easier path to go public with less regulatory scrutiny than the traditional IPO route. But the frenzy has started to meet with greater investor skepticism, and has also caught the eye of regulators”, the report indicated.