Citi hands SEC a SPAC victory

A view of the exterior of the Citibank corporate headquarters in New York, New York, U.S. May 20, 2015. REUTERS/Mike Segar/File Photo

NEW YORK, April 5 (Reuters Breakingviews) - Citigroup (C.N) isn’t so sure about special-purpose acquisition companies anymore. The bank run by Jane Fraser is putting its leading SPAC business on pause after the U.S. Securities and Exchange Commission proposed new regulations, according to Bloomberg. It’s a win for the agency before its rules even go into effect.

Citi underwrote $22 billion across 108 IPOs in 2021, taking nearly 14% of the market, the largest, per SPAC Research. SPAC impresario Michael Klein made his name as a dealmaker at the bank; in turn, Citi worked on landmark Klein deals, including with now-$42 billion electric-car maker Lucid (LCID.O) and healthcare technology firm MultiPlan (MPLN.N).

Lucid drew an SEC investigation read more ; MultiPlan, a major lawsuit. And with 2021’s SPAC boom now a bust, the SEC has ammo for a crackdown. But Citi’s decision is significant. Other major SPAC banks like Cantor Fitzgerald, second in the league tables last year, had fewer splashy names attached to business. That Citi has voluntarily stepped back to re-evaluate its role could push others to follow suit, and without the SEC doing much, yet.

(By Jonathan Guilford)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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