By Natalie DeCoste
The Senate confirmed former Obama administration regulator Gary Gensler as the new head of the Securities and Exchanges Commission.
Gensler is an MIT professor and former Goldman Sachs partner well known in Washington for his work at the Commodity Futures Trading Commission, where he devised the regulatory framework for the multitrillion-dollar derivatives market.
The vote to confirm Gensler to the SEC was 53-45, giving the Democrats a 3-2 majority on the commission, allowing Gensler to make moves on the long list of things progressives hope the commission achieves. Only three Republicans crossed the aisle, reflecting the party’s limited desire for a policy agenda that will go along with President Biden’s agenda.
“Constant attempts by some of the industry to evade rules and regulations and a level playing field are in for a rude awakening from a Gary Gensler SEC,” said Better Markets President and CEO Dennis Kelleher, who served with Gensler on President Biden’s presidential transition review team.
The years of lighter regulation under the Trump administration are expected to end with the new majority on the SEC.
“The SEC has been asleep on the job for long enough. It’s time for the commission to get up off its behind and protect investors and consumers,” said Sen. Elizabeth Warren (D-MA.) to Gensler during his confirmation hearing in the Senate Banking Committee in March.
During his hearing, Gensler promised to look into digital currencies, the GameStop trading mania, and how corporate America prioritizes environmental, social, and governance issues (ESG).
It is expected that Gensler’s work around ESG issues will usher in sweeping new federal regulations that would require companies to disclose contributions and exposure to climate change. The focus on ESG issues will help further the Biden administration’s climate change agenda.
“There’s tens of trillions of dollars of invested assets that are looking for more information about climate risk. I think then the SEC has a role to play to help bring some consistency and comparability to those guidelines,” said Gensler said during his confirmation hearing.
The issues surrounding GameStop’s boom in the stock market are likely to take up a large chunk of the SEC’s agenda. In his March confirmation hearing, both Democrats and Republicans asked Gensler whether he would scrutinize payment for order flow and game-like tactics used by brokerages to entice customers to their platforms.
Other pressing issues in the media will also make the SEC’s agenda, such as the boom in special-purpose acquisition companies, SPACs, and the recent collapse of Archegos Capital Management.
“Any chairman comes to the SEC with their ideas of what they want their priorities to be. But those priorities are in some ways at the mercy of what’s happening in the markets at the time,” said David Grim, a partner at Stradley Ronon Stevens & Young who formerly served as an SEC division director.
