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Apex’s Failed SPAC Settles $1.5M SEC Charge

Northern Star settled SEC charges that it mislead investors in public filings, indicating it had not had conversations with Apex prior to its IPO.

In early 2021, Apex Clearing, a subsidiary of Apex Fintech Solutions, agreed to go public via a merger with Northern Star Investment Corp. II, a special purpose acquisition company led by Jonathan Ledecky, co-owner of the New York Islanders. But in December of that year, Apex pulled out of the merger agreement.

This week, Northern Star settled charges with the Securities and Exchange Commission that it mislead investors in public filings, indicating it had not had conversations with potential target acquisitions prior to its initial public offering. But in fact, the SEC claims, the SPAC had been in discussions with Apex since late December 2020, weeks before its IPO, a violation of antifraud provisions in the Securities Act.

“Northern Star’s failure to disclose discussions with its merger target kept investors in the dark about its future plans, information that would have been important in deciding whether to invest in this SPAC,” said Nicholas P. Grippo, director of the SEC’s Philadelphia Regional Office, in a statement. “Given that the purpose of a SPAC is to identify and acquire an operating business, SPACs should be transparent about any pre-IPO discussions with potential acquisition targets.”

The SPAC agreed to a cease-and-desist order, and will pay a $1.5 million penalty if it closes a merger transaction.

Spokespeople for both Northern Star and Apex did not respond to requests for comment prior to publication.

In the weeks leading up to the IPO, the SEC stated Apex had frequent communications with Northern Star, providing confidential financial information, valuations and the amount of money Apex might be interested in raising in a potential private investment in public equity transaction. The two firms also communicated about year-end audits, public relations, logistics of an investor presentation and Form S-4, as well as the institutional investors already signed on.  

In December, Apex said it had confidentially submitted a draft registration statement on Form S-1 with the SEC relating to a proposed initial public offering.

Just this week, the SEC tightened its oversight of SPACs with new regulations to force more disclosure, crack down on conflicts of interest and speed up the deal-making process, according to Bloomberg.

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