NEW YORK, Oct 22 (Reuters Breakingviews) - A blank-check firm’s deal with Donald Trump could be a toxic cocktail for U.S. market watchdogs. Not because of the potential for investor abuse, but because the 45th commander in chief’s new venture, a merger between his new media outfit and a special-purpose acquisition company, risks drawing the Securities and Exchange Commission and other regulators further into a counterproductive political quagmire. Trump’s bid to fold Trump Media & Technology into a SPAC called Digital World Acquisition Corp comes with many oddities. The details, beyond the plan to launch what the companies call a “non-woke” streaming service and a social network called “Truth Social,” are scant. But investors have piled in. DWAC’s shares rose 12-fold by Friday to over $100, the largest jump in recent SPAC history record according to Dealogic. That price implies Trump’s new company, which still has no real product, is worth nearly $9 billion. With or without the former president, that outperformance is a red rag to a regulatory bull. As new-ish chair of the Securities and Exchange Commission, Gary Gensler is already monitoring the SPAC market for potential abuses. Potential vulnerabilities include a reliance on projections, payouts to insiders, and the speed with which SPACs identify targets. DWAC has been listed for less than two months. The average time it takes a blank-check to announce a deal is five months, Dealogic data shows. But if Trump is a challenge to the SEC, he’s also a poison pill. Gensler is already moving the SEC closer to the progressive goals of President Joe Biden, who nominated him. He has proposed making it easier to claw back executive compensation for wrongdoing, and is considering tougher corporate disclosures on global warming and diversity. These issues are politically polarizing. Trump’s arrival on the SPAC scene risks making the policing of these financial innovations political too. If the SEC goes heavy on SPACs in general, and DWAC in particular, Gensler will play into the hands of critics who claim his agenda goes beyond simple investor protection, such as Pennsylvania Senator Pat Toomey. Gensler needs lawmakers to back his reforms, and a finely balanced Congress leaves little room for enmity. Part of a watchdog’s job is to root out bad behavior wherever they find it. Trump’s involvement with SPACs makes that job even harder. Follow @johnsfoley on Twitter CONTEXT NEWS - Former U.S. President Donald Trump plans to take his new company, Trump Media & Technology, public by merging with a special-purpose acquisition company called Digital World Acquisition Corp, the companies said on Oct. 20. - The company said it plans to launch a social network called “Truth Social.” A beta version will launch in November 2021, with a full rollout in 2022. - DWAC shares were trading at over $100 by 11:00 a.m. ET on Oct. 22. SPAC shares are typically issued at a price of $10, in line with the amount of cash the company has to invest.