SEC steps in to regulate SPACs more closely

, Yahoo finance

The U.S. Securities and Exchange Commission has started an inquiry into the blank check company frenzy that’s gripping Wall Street and is seeking information on how underwriters are managing the risks involved, Reuters reported.

The regulator has in recent days sent letters to Wall Street banks on their dealings with special purpose acquisition companies, the news agency reported, citing four unidentified people with direct knowledge of the matter. The inquiry is asking for voluntary information and isn’t at the level of a formal investigation, Reuters said

The SEC is seeking information on deal fees, volumes and internal controls to police deals and asking questions on compliance and reporting, according to Reuters. Concerns may center around due diligence and the heightened risk of insider trading when a SPAC goes public and when it announces an acquisition target, the report said..

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