SEC launches an informal investigation

, Lexology

US Securities and Exchange Commission (SEC) has reportedly launched an inquiry into what has been described as a SPAC acquisition frenzy and has sent letters to Wall Street banks seeking information on their dealings with SPACs.

The SEC’s reported informal investigation follows a statement earlier in March by Acting Commission Chair Allison Herren Lee expressing concern over the recent SPAC wave. During an Investor Advisory Committee Meeting on March 11, 2021, Lee stated, “Lately, we have seen more and more evidence on the risk side of the equation for SPACs as we see studies showing that their performance for most investors doesn’t match the hype.”

It remains to be seen whether the SEC will escalate its inquiry into a formal investigation, but there are steps which financial institutions can take now to protect themselves.

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