On July 22, Financial Industry Regulatory Authority (FINRA) CEO Robert Cook announced the self-regulatory organization’s plan to conduct a series of targeted reviews into special purpose acquisition companies or SPACs. Speaking at the Securities Industry and Financial Markets Association’s virtual summit, Cook said FINRA is in the “early stages of preparing some targeted sweeps” to address the latest trends affecting financial markets, such as SPACs, “finfluencers” (social media influencers giving financial advice), and options account openings by unsophisticated investors. Cook noted that FINRA continues to be “interested in the SPAC space and the conflicts of interest that might be there.”
Member firms that have participated in SPAC transactions as underwriters or advisers should expect to receive requests from FINRA’s Examinations and Enforcement departments regarding, among other things, potential conflicts of interest presented by their roles in SPAC transactions. FINRA’s Corporate Financing Department may also use this period as an opportunity to more closely scrutinize disclosures in SPAC initial public offerings.
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