Just a few years after he helped banks create a giant market for “check” companies in white “, are moving away from the agreements, fearing the risk.
According to Bloomberg, the Goldman Sachs Group has ended its holding with most of its Special Purpose Acquisition Companies (SPACs) and has temporarily stopped issuing new US SPAC companies.
The agency, citing sources, said the Bank of America has stopped doing business with some special purpose acquisition companies and may turn back further as it evaluates its deal policies.
This decline comes after a massive boom in this type of company over the past couple of years, as financiers, politicians and celebrities poured in. in empty listed companies in public grants to raise funds in so you can buy other companies.
But new guidelines issued by the Securities and Exchange Commission absorbed much of the bubble before it burst, according to Bloomberg.
This has raised the attention of banks’ recent concerns about liability risks stemming from the new rules, which aim to strengthen market supervision after registering record subsequent annuals.
The new proposals drawn up by the SEC will require SPACs to disclose more information on potential conflicts of interest and make it easier to sue in investors judgment for false expectations.
They will also require underwriters of investment banks to cover the underwriting of company offers by “check.” in bianco “to also be custodians of subsequent mergers on target companies, a process known as de-SPAC. Leading law firms have warned that the expansion of liability insurance poses a greater risk for investment banks.
Citigroup, in turn, suspended initial public offerings of new US companies by “check.” in white “until more clarity is gained on the potential legal risks posed by the guidelines.
Goldman Sachs has also backtracked on the proposed rules, though in rare cases the US giant may choose to continue the consultancy work with a small number of SPAC clients.
Bank of America, Citigroup and Goldman together have acquired more than 27% of US SPAC operations since the beginning of last year and have overseen operations worth more than $ 47 billion, according to data collected by Bloomberg.
Special Purpose Acquisitions or SPACs work with investment banks who advise them even after they go public to complete their merger with a target company, known as the de-SPAC agreement, and if they fail to complete this agreement, they are forced to return the capital to the investors.
Withdrawal is likely to irritate customers who have raised capital to withdraw their SPVs and are still looking for acquisition targets.
It is unusual for the bank to withdraw from an active check company in white – who raised funds from insurers – because it usually works on the second tier of the deal, or even de-SPAC, a move that would leave the sponsor banks for their checks in white corporate clients in limbo.
The sentiment also weighed on equities, with the De-SPAC index – which tracks 25 listed companies in scholarship through a merger with SPAC – Monday in drop of 10.4%.
U.S.-listed special-purpose acquisitions raised $ 679.3 million through initial public offerings in April, up 89% in less than the media monthly of $ 5.95 billion last year.
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