Goldman Sachs has suspended new Spac offerings, said people familiar with the case, which has dealt another blow to letterhead companies as regulators approach a once thriving market.

The move marks a retreat for Wall Street Investment Bank, which last year became the second-largest underwriter for special purpose vehicles, helping sponsors raise nearly $ 16 billion, according to Refinitiv.

Goldman will also stop working with most of the Spacs that helped publish, added one of the people.

Spacs are fictitious companies that raise money from investors and listings in the stock market. Their sponsors are then looking for a private company to make public through the merger. In 2020, cars experienced a surge in popularity, but have since attracted regulatory review.

The U.S. Securities and Exchange Commission in March proposed reforms to the Spac market to improve transparency and bring the rules in line with the rules of traditional initial public offerings.

The proposal, which is open to public discussion, will increase the responsibility of underwriters, requiring banks operating on IPO Spac to also work on the next merger. Banks will also be liable for any distortions related to the merger.

“We are reducing our involvement in the Spac business in response to the changing regulatory environment,” Goldman said.

Goldman was one of the biggest winners of Spac’s recent boom, earning lucrative fees that come with working on Spac’s IPOs and subsequent mergers, but it has since declined as investor interest has cooled and performance has declined. Earlier, Bloomberg reported that the bank is curtailing cooperation with Spacs.

Citigroup is also more cautious about Spacs, following the proposed rules, said a person informed on the matter. The group, which in 2021 was the main underwriter of IPO Spac, has not worked on a new list of blank checks since the release of the offer.

Banks typically receive about 5 percent of Spac’s IPO proceeds in the form of fees, with about 3.5 percent of that earned after a blank check car completes a merger with a private company.

The SEC’s proposal sees deferred fees as evidence of “strong financial interest” in completing the merger, and therefore banks should be considered underwriters of the deal and assume any related commitments.

“This is a significant rewriting of historical practice as what qualifies as an underwriter’s commitment,” said one Spac lawyer, adding that “all banks are very worried about being considered underwriters.”

The SEC proposal followed regulatory investigations into last year’s Spac deals.

Lucid Motors, an electric car company that became public through a merger with Churchill Capital Corp IV, was felt for disclosing information she made when the company was listed.

Digital World Acquisition Corp., the host of former US President Donald Trump’s entertainment startup, Trump Media and Technology Group, said last December that authorities investigation information between the two groups.