DOGE Advocates for Easier SPAC Regulations, Sparking SEC Concerns

DOGE officials have been engaging with the SEC to explore the possibility of easing regulations around Special Purpose Acquisition Companies (SPACs) and confidential reporting by private investment funds. Companies have expressed that the current regulations are burdensome and unnecessary, prompting DOGE to advocate for fewer requirements for private investment advisers to disclose data confidentially. This move aims to make it easier for companies to go public via SPACs, lower compliance costs, and reduce oversight of private funds.

The Biden administration had previously cracked down on the SPAC sector, citing concerns over weak diligence compared to the more rigorous IPO process. This regulatory push was part of a broader effort to shield investors and prevent risks to financial stability in the private funds sector. However, DOGE's involvement in crafting new policies has raised concerns among some SEC officials, who are worried about the White House's influence on the regulator's independent operations.

DOGE's advocacy for deregulation aligns with traditional Republican views, which have often criticized the SEC for imposing unnecessary regulatory burdens. Republican SEC Commissioners Mary Uyeda and Hester Peirce have previously dismissed what they claimed were needless regulatory burdens for SPACs and private funds. The SEC has also been pushing to dismantle some regulations for SPACs, suggesting that shell companies raise funds through a listing to acquire a private company.

Uyeda and Pierce have also objected to changes such as removing a safe harbor that had helped shield SPAC sponsors from legal liability for unrealistic or potentially misleading financial projections. The SEC officials argued that the rule would inhibit a potentially valuable investor tool. Chairman Paul Atkins has stated that welcoming DOGE into the SEC has resulted in cost savings at the independent financial regulator, with the agency pointing to voluntary exits, including retirements and individuals who considered the Trump administration’s deferred resignation offer.

Critics, such as Amanda Fischer, policy director and chief operating officer at financial reform advocacy group Better Markets, have argued that any DOGE involvement in the SEC’s legislation raises serious concerns about potential conflicts of interest and political influence dominating staff expertise. Fischer, who previously worked as the chief of staff of former SEC Chair Gary Gensler, has expressed outrage that outside officials at the agency, who were not selected by the chair, have a say in rulemaking activities.