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SEC Sues SPAC Adviser for Not Disclosing Conflicts of Interest

·1 min read

(Bloomberg) -- The US Securities and Exchange Commission sued an investment firm on Tuesday for failing to properly disclose conflicts of interest tied to special purpose acquisition companies -- the latest example of Wall Street’s main regulator clamping down on the once white-hot market.

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The SEC alleged that Perceptive Advisors didn’t make to clear to investors that the sponsors of multiple SPACs it had formed were owned by both the firm’s personnel and a private fund that it had advised. The firm also didn’t file a form disclosing its ownership of a public company on time, the agency said in a statement.

Perceptive, which didn’t admit or deny the SEC’s allegations, agreed to pay a $1.5 million penalty to settle the case. In a statement, the firm said that it fully cooperated with the SEC and identified the disclosure gaps.

“Perceptive is pleased to have resolved this matter,” the firm said. “Perceptive had remedied or was in the process of remedying all SPAC disclosure and compliance gaps ultimately identified by the SEC prior to receiving the SEC’s initial inquiry.”

The SEC has repeatedly raised concerns about blank-check firms, which list on public stock exchanges to raise money so they can buy other companies. In March, the regulator proposed a new rule that would force SPACs to disclose more information about their sponsors and potential conflicts of interest.

An index that tracks 25 companies that completed their tie-ups has dropped about 60% this year.

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