Last year was the year of the SPAC—for two-and-a-half months. Whatever happens from here out, 2021 will be the new year of the SPAC, as they’ve already raised $87.9 billion this young year, $4.5 billion more than last year and 6.5 times as much as in any prior year.

And things are, indeed, happening, like new SPACs popping up in new places and the hundreds of existing SPACs striking deals on a seemingly daily basis. But there are also things happening not generally associated with years designated the year of a thing, by which we mean bad things. Things like people saying, “huh, you think there are maybe already too many of these things?

First-day trading pops, or share price rises, for SPACs were commonplace earlier this year with gains rising to over 30% but have faded in March amid a broader sell-off in many companies that have agreed to go public through a SPAC merger.

All but one of the 15 SPACs that started trading this week closed below their initial public offering (IPO) price of $10 per unit on their first day of trading….

Bad enough, to be sure, and not likely to be improved by the fact that the Securities and Exchange Commission has upgraded its level of concern vis-à-vis blank-check companies from bemused, head-shaking quizzicality to ominous letters presaging future even more ominous 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, one of those two people said letters were sent by the SEC’s enforcement division, suggesting they may be a precursor to a formal investigation.

This person said the SEC wanted information on SPAC deal fees, volumes, and what controls banks have in place to police the deals internally. The second above source said the SEC asked questions relating to compliance, reporting and internal controls….

The SEC may be worried about the depth of due diligence SPACs perform before acquiring assets, and whether huge payouts are fully disclosed to investors, said a third source.

Another potential concern is the heightened risk of insider trading between when a SPAC goes public and when it announces its acquisition target, the second source added.

“Wall Street’s biggest banks are being asked: what’s going on?” the person said.

And, you know, while they’re at it, they—along with everyone else—would also like to know what’s going on with one particular SPAC sponsor.

“After rigging the Nasdaq, making front-page news and the SEC claiming it had never heard of it, the SEC now reveals that SoftBank is under federal investigation,” PlainSite tweeted Wednesday…. The aggressive trading raised concerns at Elliott Management, which is believed to be SoftBank’s second largest investor, according to the Wall Street Journal. It reported that the hedge fund had bought put options on an index of tech stocks to protect itself against SoftBank’s trading.

U.S. regulator opens inquiry into Wall Street’s blank check IPO frenzy – sources [Reuters]
SEC Confirms Probe of SoftBank [II]
SPAC trading pops deflate as ‘exuberance and greed’ depart [Reuters]
First SPAC in Scandinavia Has Institutional Funds Piling In [Bloomberg]
Space infrastructure conglomerate Redwire to go public via a SPAC [CNBC]
British electric vehicle firm Arrival sinks in SPAC debut [CNBC]

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