(Bloomberg) -- Securities and Exchange Commission Chair Gary Gensler is warning companies against seeking a tie-up with a blank-check company as a less arduous path to going public.

Gensler signaled at an event Tuesday for business executives that Wall Street’s main regulator is on the look-out for firms that want to use special purpose acquisition company mergers to sidestep red tape associated with traditional initial public offerings. Gensler’s comments come as the regulator steps up its scrutiny of firms involved in SPAC deals, including Lucid Group Inc. and Digital World Acquisition Corp., which is merging with former President Donald Trump’s media company.

“Private companies are thinking this is an alternative way to go public,” Gensler said at the Wall Street Journal’s CEO Council, without specifying any firms. “These three core tenants about disclosure, marketing and gatekeepers to ensure that the protections in the traditional IPO market are comparable here and that we don’t have some imbalance or what people might call an arbitrage between the two approaches.”

Lucid Plunges as SEC Investigates Another Post-SPAC EV Maker

Earlier this week, Digital World disclosed the SEC had sought records tied to meetings involving the firm’s board of directors, its policies and procedures related to trading and the identities of certain investors. Separately, Lucid said it received a subpoena on Dec. 3 that appeared to be related to the electric carmaker’s deal with Churchill Capital Corp. IV, the SPAC that took it public in July.

The SEC has indicated it may propose new rules related to SPACs as soon as April. 

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