Monday, March 22, 2021

"UBS quietly bans advisers from pitching booming SPACs to clients"

From CNN, March 18:

UBS, a major player in the blank-check boom captivating Wall Street, has quietly banned its financial advisers from pitching SPAC stocks to wealth management clients, CNN Business has learned.

The restrictions, which haven't been previously reported, highlight the elevated risk of playing in what is one of the hottest corners of finance right now.
Special purpose acquisition companies (SPACs) are shell companies that exist only to take private firms public through reverse mergers. Although these kinds of deals were once frowned upon, SPACs have become all the rage, with major companies including Virgin Galactic, DraftKings and Playboy all going public this way. 
SPACs have raised more than $80 billion so far in 2021, up 2,000% from this point last year, according to Dealogic. The recent involvement of pro athletes, singers and politicians is raising concern among US financial regulators.
Earlier this month, UBS (UBS) decided its wealth management clients in the Americas will be allowed to trade SPAC shares only on an unsolicited basis, a person familiar with the matter told CNN Business.
In other words, UBS advisers are not permitted to call their wealthy clients to encourage them to buy or sell specific SPACs trading on the open market. Once the newly merged entity has gone public, the UBS advisers will be allowed to pitch the stocks.
A UBS spokesperson declined to comment.
The decision was made, the person familiar with the matter said, because of the limited availability of information and research on SPACs before they merge with private companies....
Some SPACs 'make no sense'....