Goldman pauses work on new Spacs after SEC takes tougher stance

Goldman pauses work on new Spacs after SEC takes tougher stance

Goldman Sachs has paused new Spac offerings, said people familiar with the matter, in another blow to blank-cheque companies as regulators close in on the once-booming market.

The move marks a retreat for the Wall Street investment bank, which last year ranked as the second-biggest underwriter for special purpose acquisition companies, helping sponsors raise almost $16bn, according to data from Refinitiv.

Goldman will also stop working with a majority of the Spacs that it helped take public, one of the people added.

Spacs are shell companies that raise money from investors and list on the stock market. Their sponsors then search for a private company to take public through a merger. The vehicles experienced a surge of popularity in 2020, but have since attracted regulatory scrutiny.

The US Securities and Exchange Commission in March proposed reforms to the Spac market with an aim to improve transparency and bring rules more in line with those of traditional initial public offerings.

The proposal, which is open for public comment, would increase the liability on underwriters by requiring banks that work on Spac IPOs to also work on the subsequent merger. Banks would also be liable for any misstatements related to the merger.

“We are reducing our involvement in