Goldman Sachs pausing work with most SPACs after liability threat

Goldman Sachs Group Inc is pulling out of working with most blank-check vehicles it took public, fearing fallout from the regulatory clampdown on what was one of the hottest trends on Wall Street in recent years, Bloomberg Law reported on Monday.

The bank has been telling sponsors of the special purpose acquisition companies (SPACs) that it will be ending its involvement, the report said, citing people with knowledge of the matter.

The Wall Street giant will also pause working on new SPAC issuance in the United States for now, according to one of the people cited in the report.

Goldman Sachs did not immediately respond to a Reuters request for comment.

In March, the U.S. Securities and Exchange Commission unveiled a draft rule that would require SPACs to disclose more details about their sponsors, their compensation, conflicts of interest and share dilution.

SPACs are shell companies that raise funds through a listing to merge with a private company and take it public, allowing the target to sidestep the stiffer regulatory scrutiny of a traditional initial public offering.