SEC launches inquiry into SPAC IPO frenzy - reports

Letter sent to Wall Street banks

The US Securities and Exchange Commission (SEC) has opened an investigation into the frenzy of special purpose acquisition companies (SPACs) IPOs on Wall Street, amid concerns about the risks involved.

According to an exclusive report by Reuters, which quotes four people familiar with the situation, the US regulator has written letters to Wall Street banks requesting information on how they are managing the risks associated with these "blank cheque" vehicles. SPACs are listed shell companies which raise funds to acquire private companies with the intention of bringing them to the public market, thereby bypassing the traditional IPO route. Reuters reports that at this stage, the SEC is asking for information to be provided voluntarily and it is therefore not an official investigation...