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Subscribe13 DEC 2024 / REGULATORY
Wall Street heavyweight Cantor Fitzgerald got hit with a $6.75 million fine from the SEC, and folks are raising their eyebrows. The reason? They bent the truth about two SPAC deals. Those so-called “blank-check” companies had more going on behind the scenes than investors were told, and now Cantor’s footing the bill.
If SPACs were a poker game, they’d be the wild cards. These blank-check companies raise big bucks through IPOs, promising to merge with a private company and take it public. It’s a shortcut to the stock market, but shortcuts come with strings attached, like telling investors the truth. Cantor’s SPACs, CF Finance Acquisition Corp. II and CF Acquisition Corp. V, raised a cool $750 million in 2020 and 2021. They later merged with View, Inc. (a smart-glass maker) and Satellogic Inc. (a satellite imaging firm). But here’s the kicker: the SEC says Cantor was already deep in merger talks with these companies while claiming otherwise in public filings. That’s a big no-no.
The SEC wasn’t buying Cantor’s story. According to the agency, Cantor’s filings said the SPACs hadn’t had any “substantive discussions” with potential merger targets before their IPOs. But the truth? Cantor’s execs were already chatting up companies, including View and Satellogic. “Investors deserve the straight-up truth,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “If you’re talking deals, your disclosures better reflect it.” Cantor neither admitted nor denied the SEC’s allegations, but they agreed to pay up and promise to follow the rules moving forward. Still, for a firm as big as Cantor, $6.75 million is more like a slap on the wrist than a gut punch.
SPACs were Wall Street’s MVPs in 2020 and 2021, but the shine has worn off. Deals like View’s and Satellogic’s haven’t exactly knocked it out of the park—View even filed for bankruptcy last year. And Cantor isn’t the only player under the SEC’s microscope. Earlier this year, Digital World Acquisition Corp. coughed up $18 million over similar allegations tied to Trump’s social media venture. With scandals piling up, SPACs are looking more like a gamble than a sure thing. Investors are left wondering: are these deals worth the risk?
Cantor’s case is another wake-up call for Wall Street: you can’t cut corners on transparency. Investors count on accurate disclosures to make smart moves, and anything less undermines trust in the system. The SEC is clearly tightening the screws on SPACs, and Cantor’s settlement is just the latest example. Expect more crackdowns and stricter rules as regulators try to keep these deals on the up-and-up. So, what’s the takeaway here? If you’re playing in the SPAC sandbox, you’d better play it straight because the SEC isn’t messing around. Unlock exclusive industry insights and the latest updates, subscribe to our newsletter and stay informed every step of the way!"
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