The Securities and Exchange Commission said it has charged global financial services firm Cantor Fitzgerald, L.P. over misleading disclosures involving two special purpose acquisition companies (SPACs), Investment News reports.
Cantor Fitzgerald agreed to pay a $6.75 million civil penalty to settle the SEC’s charges that it caused two SPACS that it controlled to make misleading statements to investors ahead of their initial public offerings (IPOs).
SPACs, sometimes called “blank check companies”, are publicly traded corporations formed to search for a private company to merge with and raise money from investors through an initial public offering, giving the targeted company a shorter process for being listed than a traditional IPO.
The SEC determined that in 2020 and 2021, a team of Cantor Fitzgerald executives managed and controlled two SPACs – CF Finance Acquisition Corp. II and CF Acquisition Corp. V – which raised $750 million from investors through IPOs ahead of the SPACs’ eventual mergers with View, Inc. and Satellogic Inc.
Cantor Fitzgerald caused the SPACs in their SEC filings to deny having had contact or substantive discussions with potential business combination targets prior to their IPOs, according to the SEC’s order.
But at the time of the IPOs, it is alleged that Cantor Fitzgerald personnel, acting on behalf of the SPACs, had already started negotiating with a small group of potential target companies for the SPACs, including with View and Satellogic, the companies with which the SPACs eventually merged.
“Cantor Fitzgerald misled investors about a critical investment consideration by repeatedly stating in public filings that it had not identified or approached any potential merger targets, despite having had substantive discussions with several private companies regarding a potential merger, including with the companies with which its SPACs eventually merged,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “This enforcement action reflects the straightforward proposition that any disclosures about substantive discussions with potential targets must be materially accurate.”
Cantor was charged with causing violations of certain antifraud and proxy provisions of the federal securities laws. The firm did not admit or deny the SEC’s findings, but agreed to pay the civil penalty, and to cease and desist from violations of the charged provisions.
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