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May 10, 2022

Goldman Sachs to trim SPAC market presence amid regulatory crackdowns

Goldman Sachs is slashing its tie-ups with blank-check companies amid the increasing regulatory crackdowns in the SPAC market, reported Bloomberg News.

The Wall Street bank has been informing sponsors of the blank-check vehicles that it will stop working with them over worries about the new liability guidelines from the regulators, sources with knowledge of the development told the news agency.

The bank has also decided to halt new SPAC issuance in the US at the moment, one of the sources added.

Even after going public, blank-check vehicles work with their advisers to conclude their merger with the target firm.

If a SPAC fails to complete the process, known as the de-SPAC transaction, it will be required to return the capital to investors.

According to some sources, Goldman will continue to work with SPACs that are in the process of concluding de-SPAC transactions.

The bank may also choose to work with a small number of blank-check vehicles under rare circumstances.

SPACs, or blank-check firms, list on public stock exchanges to raise money in a bid to buy other companies.

The Securities and Exchange Commission (SEC) in the US has strengthened its oversight of the SPAC market. The new guidelines require SPACs to reveal more details on potential conflicts of interest and allow investors to sue over false rejections.

Goldman Sachs spokeswoman Maeve DuVally told the news agency: “We are reducing our involvement in the SPAC business in response to the changed regulatory environment.”

She also added that Goldman may change its policy if the regulators decide to trim down the current guidelines.

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