NEW YORK: Credit Suisse Group AG has formed a new committee to assess its involvement in blank cheque-firm mergers as underwriters face the prospect of heightened liability under proposed financial regulations, according to a person with knowledge of the matter.

       The Swiss lender told staff in a memo that the “tactical deSPAC committee” will focus on pending mergers involving United States special purpose acquisition companies (SPACs), said the person, requesting anonymity discussing the move.

       Any transaction must be approved by both the new committee and the firm’s investment banking committee, the person said.

       The bank’s move comes in the wake of rules covering SPAC deals proposed recently by the Securities and Exchange Commission (SEC).

       The deSPAC committee includes global head of equity and debt capital markets David Hermer, SPAC chief Niron Stabinsky, Harold Bogle, chairman of investment banking and capital markets; and ECM managing directors Frank McGee and Conrad Rubin.

       In a deSPAC transaction, a SPAC merges with a target business or businesses.

       Credit Suisse has worked on initial public offerings (IPOs) that raised over US$45bil (RM190.3bil) for more than 100 US-listed SPACs since the start of 2020, according to data compiled by Bloomberg.

       A bank spokesman declined to comment.

       Wall Street banks have been quick to take heed of the SEC’s rule-making efforts.

       The regulator’s proposal “that sent the biggest shock waves through the market” is its potential to define a SPAC IPO underwriter as an underwriter in a deSPAC, which could leave it subject to liability, according to law firm Morrison & Foerster (MoFo).

       “Underwriter liability is more than participants in SPAC transactions expected, and may lead some newly deemed ‘underwriters’ to question if participating in the SPAC process is worth the risk,” MoFo partners wrote in a memo.

       The law firm said some banks have reacted to the rules with preemptive actions. — Bloomberg