Securities and Exchange Commission Chair Gary Gensler stormed onto the scene as Wall Street’s chief regulator with a rush of ideas on how to better protect investors and strengthen the more than $100 trillion capital markets. He’ll leave with critical pieces of his agenda in legal and political limbo. On Thursday, Gensler — a long-time Goldman Sachs partner turned veteran financial regulator — announced that he would be stepping down as the top U.S. markets regulator on Jan. 20. His exit will cap what has been a wild stretch for the SEC that began with the rise of meme stocks, including one of the largest financial frauds in American history and a banking crisis, and ends as bitcoin knocks on the door of $100,000 for the first time ever. Gensler has pursued a sweeping and contentious agenda as SEC chair all the while, often leaving financial giants, cryptocurrency firms and their allies on Capitol Hill fuming. He moved to overhaul the pricing of U.S. stocks and to bolster the resiliency of the almighty Treasury market. He pushed to usher in a host of new disclosure requirements for public companies, including about their climate-related risks, and installed new rules around corporate insiders selling shares — to name a few of his rulemaking efforts.
“You’ve had chairs who have taken on one or two industries and left others untouched, and the result is that they really end up fighting only one industry or on a handful of rules at a time. He didn’t take that approach — he took on everyone,” Healthy Markets Association CEO Tyler Gellasch told MM. “He picked a fight every day with folks who would run to Congress or the Fifth Circuit [for help].” But, as Gensler heads for the exit, the fates of some of his plans for Wall Street and corporate America remain up in the air. Legal challenges against the SEC’s climate disclosure rule and push to overhaul the pricing of U.S. stocks, among others, are ongoing. The court crusade, steered in large part by leading financial industry and big business groups, has already begun to pay off. On Thursday, shortly before Gensler’s announcement, a federal judge in Texas struck down the SEC’s so-called dealer rule — handing hedge fund groups a major win. What’s more, President-elect Donald Trump’s yet-to-be-named pick for SEC chair is likely to look at whether to undo other rules — while they pull back on enforcement in some corners of the markets, such as crypto. “Much of Gensler’s agenda will ultimately not survive, in my opinion, the next four years,” said Citadel CEO Ken Griffin — whose firms have sharply criticized key parts of Gensler’s agenda — on Thursday, per the Financial Times. “Between the courts and a new SEC, we’re going to see a rollback on the regulatory onslaught.” Unwinding Gensler’s agenda, however, won’t be simple.
Judges may not look kindly on the SEC suddenly pivoting its stance on a given issue, despite the administration change. And even then, much of Gensler’s agenda isn’t likely to go anywhere. Only a handful of the 44 rules passed so far during his tenure have been challenged in the courts, and few expect that a Trump-appointed chair would seek to upend certain uncontroversial efforts like central clearing in the Treasury market. Most of the rules adopted by the Gensler-led SEC were approved by bipartisan votes.
“You’re missing the plot. The SEC under Chair Gensler has been one of the most productive Commissions on behalf of issuers and investors since the agency was created 90 years ago,” an SEC spokesperson told MM. “The reforms adopted over the last three-and-a-half years enhance efficiency, competition, and investor protection in the U.S. capital markets. The agency’s enforcement actions have held wrongdoers accountable and returned billions to harmed investors.” Investment Company Institute CEO Eric Pan told MM the next SEC chair will be walking into “a very challenging” situation. While there has been an uproar over some of the Gensler SEC’s rules, the next chair may not need to revisit those or want to, Pan said — at least not immediately. They’ll have their own priorities and likely push to pivot the SEC’s approach to crypto after several years of intense scrutiny on the industry that predates Gensler’s time as chair. Resources, meanwhile, will be thin.
“The next SEC chair has to make a hard decision as to what he or she is going to focus on,” Pan said. “As a chair, you have bandwidth issues. So you have to be selective. You have to prioritize.” He added: “There’s no Gensler rule [that] if you fail to revisit it, there’s going to be a huge problem.” IT’S FRIDAY — And we here at POLITICO have aged 15 years with this news cycle. Want to talk financial markets policy in 2025? Give me a shout: dharty@politico.com. And, as always, you can reach Sam at ssutton@politico.com and @samjsutton.
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