Top SPAC issuer Citigroup will reportedly halt blank-check IPOs after the SEC signals tougher stance

• Citigroup will pause SPAC IPO issuance as the SEC looks to tighten rules on the space, Bloomberg reported.
• The prolific SPAC underwriter is awaiting clarity on what new regulation entails, sources told Bloomberg.

Citigroup is set to temporarily stop initial public offerings of new special purpose acquisition companies until it can better grasp new regulations proposed by the Securities and Exchange Commission, according to a Bloomberg report.

Sources told Bloomberg that the firm is waiting for more clarity from its legal advisors to investigate liabilities and other issues before moving forward with new SPAC deals.

The SEC last week proposed new parameters after some lawmakers said SPACs helped companies circumvent traditional IPO guidelines, putting retail traders at risk.

The new rules would mean SPACs must disclose more information regarding potential conflicts of interest, as well as make it easier to assume liability over false projections.

The new rules "should better motivate SPAC underwriters to exercise the care necessary to ensure the accuracy of the disclosure in these transactions," the SEC wrote in a statement.

But Citi is not alone, as it joins other top banks in waiting for further clarity to see how the SEC's new rules impact SPACs, sources told Insider. Citi's halt is notable as it was the biggest SPAC underwriter in 2021 and second biggest in 2020, with both years witnessing booms in blank-check deals.

Last year saw massive volume of SPAC IPO issuance, with 613 completed blank-check listings comprising a total of $162.5 billion, according to data from SPACInsider.