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Regulators appear to be growing increasingly wary of banks and fintech startups...

 2 years ago
source link: https://finance.yahoo.com/news/regulators-appear-growing-increasingly-wary-141649566.html
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Regulators appear to be growing increasingly wary of banks and fintech startups getting too cozy

Mary Ann Azevedo
Sun, September 11, 2022, 11:16 PM·10 min read

Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

At the end of last week, venture-backed robo-adviser Wealthfront snuck in an announcement that the deal in which it was to be acquired by Swiss banking giant UBS for $1.4 billion was scrapped. Instead, as TC+ editor Alex Wilhelm reported, UBS “invested $69.7 million in the company at a valuation that Wealthfront described as $1.4 billion.”

The deal falling through — albeit as part of a “mutual agreement,” according to the two companies — came as a surprise to many and raised a number of questions.

Still, Wealthfront CEO David Fortunato tried to put an optimistic spin on the development in a September 2 blog post, writing: “I am incredibly excited about Wealthfront’s path forward as an independent company and am proud to share that thanks to the hard work of our team and the trust you put in us, we will be cash flow positive and EBITDA profitable in the next few months.”

In its own (briefer) announcement, UBS said it remained “committed to its growth plans in the US and strengthening its digital offering.”

When the acquisition agreement was first announced in January, both companies touted all the ways that combining forces would help their respective businesses grow.

David Goldstone, manager of investment research at Condor Capital, told Barron’s that he was surprised the deal was nixed, saying: “From Wealthfront’s perspective and with respect to what has happened to valuations to growth stocks, it’s not a valuation I would walk away from.”


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