DOGE Pushes SEC to Revise Biden-Era SPAC Rules

The Department of Government Efficiency (DOGE) has set its sights on the Securities and Exchange Commission's (SEC) rules governing Special Purpose Acquisition Companies (SPACs) and confidential data reporting by private investment advisers. These regulations, adopted during the Biden administration, were designed to bolster investor protection and enhance systemic risk monitoring. However, DOGE, an initiative from the Trump administration aimed at reducing federal regulatory burdens, has recently engaged with SEC staff to explore potential revisions to these rules. This move is part of a broader deregulatory push intended to lower compliance costs and stimulate market activity.

In March, DOGE's task force, which includes Elon Musk, was integrated into the SEC under a new liaison effort. This initiative granted DOGE staff access to internal SEC systems and treated them as SEC personnel, subject to standard ethics and IT protocols. A White House spokesperson confirmed that the administration is collaborating with the SEC to maintain fair and orderly markets while protecting everyday investors. However, this involvement has raised concerns among some SEC staff about the agency's independence. Traditionally, the SEC limits policy coordination with the White House to preserve regulatory impartiality. Amanda Fischer, policy director at financial reform group Better Markets, expressed serious concerns about potential conflicts of interest, stating that outside designees should not have a say in rulemaking.

The deregulatory effort aligns with the views of Republican SEC commissioners Mark Uyeda and Hester Peirce, who have previously objected to the Biden-era rules on SPACs and private funds. They argue that these regulations stifle innovation and impose unnecessary burdens on firms. Specifically, they criticized the removal of a legal "safe harbor" that protected SPAC sponsors from liability for forward-looking statements and the expanded reporting requirements under Form PF, which mandates more detailed data submissions from private fund advisers to regulators.

The SEC has confirmed its collaboration with DOGE, stating that both parties are working to find cost efficiencies and ensure effective use of public funds. While specific policy reversals have not been indicated, discussions with exchange operators about loosening SPAC requirements are ongoing. The resurgence of interest in SPACs, including among those connected to Trump’s own media venture, suggests potential momentum behind the rollback. Adam Pritchard, a law professor at the University of Michigan, noted that this departure from past practice could be seen as either a risk or an opportunity, depending on one's perspective.

President Donald Trump appointed Elon Musk and Vivek Ramaswamy to lead DOGE upon his election victory, tasking the agency with cutting federal waste, slashing regulations, and overhauling government agencies. Trump praised Musk’s operational track record and described the initiative as a “modern-day Manhattan Project.” However, in April, Musk announced his resignation as a Special Government Employee at DOGE, citing pushback within the White House and frustration with federal inefficiency and Trump’s tax plan. Despite Musk's departure, DOGE continues its efforts to streamline government operations and reduce regulatory burdens.