FINRA Targets SPACs in Most Recent Exam Sweep

Posted on October 19th, 2021 at 12:26 PM
FINRA Targets SPACs in Most Recent Exam Sweep

From the Desk of Jim Eccleston at Eccleston Law:

The Financial Industry Regulatory Authority (FINRA) has begun an examination sweep of advisors’ involvement with special purpose acquisition companies (SPACs).

According to an examination letter, FINRA plans to investigate how advisory firms offer and extend services to SPACs. SPACs are shell companies that raise funds via their own initial public offering and then typically have two years to acquire a private company that goes public through the merger. In essence, SPACs have become increasingly popular as a cheaper and more efficient alternative to the traditional initial public offering (IPO). SPACs also enable retail investors to participate in the public launch of private companies unlike with a traditional IPO. 

FINRA is requesting, as part of the exam sweep, that targeted firms detail their SPAC activities from July 2018 through September 2021. FINRA is expected to review individual firms’ policies and procedures regarding public offerings, due diligence, suitability and client communications. The newest exam sweep comes after Securities and Exchange Commission (SEC) Chairman Gary Gensler announced that his agency staff is working on a proposal to ensure “investors are better informed about the fees, costs, and conflicts that may exist with SPACs.” While SPACs have existed for several years, SPAC popularity has recently skyrocketed; there have been 461 SPACs so far this year compared to only 59 in 2019. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, finra, spac, exams

Return to Archive



Hiring Eccleston Law has been one of the best career decisions I have made and this "investment" to maintain my sterling regulatory record has been returned many times over.  If you are in a situation where you've been unfairly accused, don't hesitate to talk with Eccleston Law. They are the best.

Thomas C.


December 3, 2021
FINRA Issues Fine to Small Advisory Firm Over Material Misrepresentations

The Financial Industry Regulatory Authority has censured and issued a $250,000 fine to a Los Angeles-based advisory firm, WestPark Capital Inc., for making material misrepresentations pertaining to promissory notes offered by its parent company.

December 2, 2021
FINRA Imposes Suspension on Ohio-Based Advisor Over Outside Investments

The Financial Industry Regulatory Authority (FINRA) has issued a one-year suspension and $12,500 fine to an Ohio-based advisor, William LeBoeuf, who worked at Merrill Lynch and Cetera Advisor Networks when the violations occurred.

December 1, 2021
SEC Charges Former Illinois Edward Jones Advisor With Fraud

The Securities and Exchange Commission (SEC) has charged a former Illinois-based investment advisor, Ronald Molo, with defrauding three clients out of at least $800,000.