- UBS is barring its financial advisors from pitching certain SPAC stocks to its clients, according to a report from CNN Business.
- SPACs have boomed in popularity as companies pivoted away from the traditional IPO during the pandemic.
- UBS made the decision because of the limited availability of research on SPACs before their mergers with private companies, according to CNN.
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The boom in SPACs over the past year is being met with caution by UBS and its financial advisors, according to a report from CNN Business.
UBS is restricting its North American financial advisors from pitching certain SPAC stocks to its wealth management clients because of a lack of information and research on the blank-check investment vehicles prior to their mergers with private companies, according to CNN.
Since the beginning of 2020, more than 500 SPACs, or special-purpose acquisition companies, have gone public, as the traditional initial-public-offering route became more difficult in a remote-work environment. Twenty-four SPACs went public in just the past week, and more SPACs have already debuted in 2021 than in all of 2020, according to data from Dealogic.
UBS is said to be allowing its advisors to trade SPAC stocks for clients only on an unsolicited basis, or when directed by the client. UBS advisors can pitch SPAC stocks to clients once they complete their merger with a private company, according to the report.
However, SPAC IPOs in which UBS is an underwriter of the deal can be pitched to clients by UBS’ team of financial advisors, according to the report. UBS served as the primary underwriter for 22 SPACs last year and was one of the lead underwriters for Bill Ackman’s $4 billion SPAC, Pershing Square Tontine Holdings.
With a sea of SPACs available to invest in, investors have little to go on besides the management team when deciding which to buy. And recent SPACs from sports celebrities such as Alex Rodriguez and Colin Kaepernick should offer no assurances to investors, according to a recent warning from the Securities and Exchange Commission.