Exclusive: U.S. regulator opens inquiry into Wall Street’s blank check IPO frenzy – sources – Reuters

Exclusive: U.S. regulator opens inquiry into Wall Street’s blank check IPO frenzy – sources – Reuters

NEW YORK/WASHINGTON (Reuters) - The U.S. securities regulator has opened an inquiry into Wall Street's blank check acquisition frenzy and is seeking information on how underwriters are managing the risks involved, said four people with direct knowledge of the matter.FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, United States, June 24, 2011. REUTERS/Jonathan Ernst/File PhotoThe U.S. Securities and Exchange Commission (SEC) in recent days sent letters to Wall Street banks seeking information on their special purpose acquisition company, or SPAC, dealings, the four people said.SPACs are shell companies that raise funds via a listing to acquire a private company with the purpose of taking it public, allowing such targets to sidestep a traditional initial public offering.The SEC, which declined to comment for this story, has previously said it was monitoring the SPAC boom, but the letters are the strongest sign yet that it is stepping up scrutiny of such deals and the Wall Street banks that underwrite them.In the letters, the SEC asked the banks to provide the information voluntarily and, as such, did not rise to the level of a formal investigative demand, two of the sources said.However,