Brian Snyder / Reuters; Michael Loccisano / Getty Images; Samantha Lee / Insider
- UBS bans its financial advisers from throwing certain SPAC shares at its clients, according to a CNN Business report.
- SPACs increased in popularity as companies turned away from the traditional IPO during the pandemic.
- UBS made the decision due to the limited availability of research on SPACs before merging with private companies, according to CNN.
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The surge in SPACs over the past year has been met with caution by UBS and its financial advisers, according to a report by CNN Business.
UBS is restricting financial advisers from selling certain SPAC shares to its wealth management clients in the Americas due to a lack of information and research on the blank-check investment vehicles prior to their merger with private companies, according to CNN.
Since the beginning of 2020, more than 500 SPACs, or special-purpose procurement companies, have become known, as the traditional route for initial offerings in a remote work environment has become more difficult. Twenty-four SPACs have only seen the light of day in the past week, and more SPACs have already started in 2021 than in the whole of 2020, according to data from Dealogic.
UBS is said to allow its advisers to trade SPAC shares for clients only on an unsolicited basis, or at the client’s request. According to the report, UBS advisers can offer SPAC shares to clients once they have completed their merger with a private company.
However, according to SPAC, UAC’s team of financial advisers can direct IPOs in which UBS is a signatory to the agreement to clients. UBS served as the primary underwriter of 22 SPACs last year and was one of the leading underwriters of Bill Ackman’s $ 4 billion SPAC, Pershing Square Tontine Holdings.
With a variety of spaces available to invest in, investors have little to go on except the management team, when deciding to buy. And recent SPACs of sports celebrities like Alex Rodriguez and Colin Kaepernick should offer no investment insurance, according to a recent warning from the Securities and Exchange Commission.