Chair Gensler to Depart SEC on President-Elect Trump’s First Day
Gary Gensler, chair of the U.S. Securities and Exchange Commission will step down from his position on Jan. 20, 2025, when President-elect Donald Trump takes office. Although the official SEC announcement came this week, Gensler has not been immune to criticism for what some have called overstepping the agency’s authority. Further, the president-elect has openly expressed plans to replace Gensler.
Gensler began his tenure as the SEC’s 33rd chair on April 17, 2021, in the immediate aftermath of the GameStop market events. He led the agency through a robust rulemaking agenda to – according to the SEC – enhance efficiency, resiliency, and integrity in the U.S. capital markets. He also oversaw high-impact enforcement cases to hold wrongdoers accountable and return billions to harmed investors.
“The Securities and Exchange Commission is a remarkable agency,” said Gensler. “The staff and the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation, and ensuring that the markets work for investors and issuers alike. The staff comprises true public servants. It has been an honor of a lifetime to serve with them on behalf of everyday Americans and ensure that our capital markets remain the best in the world.”
“I thank President Biden for entrusting me with this incredible responsibility. The SEC has met our mission and enforced the law without fear or favor,” he added.
Gensler was formerly chair of the U.S. Commodity Futures Trading Commission, leading the Obama administration’s reform of the $400 trillion swaps market. He also was senior adviser to U.S. Senator Paul Sarbanes in writing the Sarbanes-Oxley Act (2002) and was undersecretary of the Treasury for Domestic Finance and assistant secretary of the Treasury from 1997 to 2001.
The following is a list of activities started, completed, or near completed during Gensler’s leadership.
Treasury Markets
During Gensler’s tenure, the SEC adopted enhancements to the $28 trillion U.S. Treasury markets. To lower cost and risk in the Treasury markets, the agency adopted rules to promote central clearing and narrow circumstances in which broker-dealers are exempt from national securities association registration.
Equity Markets
Under Gensler, the SEC said it made the first significant updates to the $55 trillion U.S. equity market in nearly 20 years. It updated the National Market System so that stocks can be traded more efficiently with narrower spreads and lower fees. Improvements also included shortening the settlement cycle to one day, which the agency said is good for investors and lowers risk in the market. Further, the agency unanimously adopted rules to update information regarding brokers’ execution quality.
Resiliency
The SEC adopted amendments during Gensler’s tenure regarding Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds. The amended rules require that large hedge fund and private equity fund advisers make current reports on certain events. The SEC further amended Form PF jointly with the Commodity Futures Trading Commission to improve the quality of the information the agencies receive from all Form PF filers. Those changes will be implemented next year. Finally, the SEC said it adopted reforms to money market funds to make them more resilient, liquid, and transparent, including in times of stress.
Corporate Governance
To better promote trust in the capital markets, the SEC adopted a number of changes regarding corporate governance under Gensler. These included updating the rules for when corporate insiders can sell their shares, for when executives have to give back compensation based on erroneously reported financials, and for disclosure of executive pay versus performance. The agency also adopted new rules to allow shareholders to vote their preferred mix of board candidates on universal proxy cards in contested director elections. Additionally, the SEC adopted rules requiring more timely disclosure by those who are seeking control and buy more than a 5% stake in a company.
Disclosure
Since April 2021, the SEC said it adopted several rules to ensure that investors get the disclosure they need from public companies and companies seeking to go public, broker-dealers, and investment advisers.
First, it adopted rules to enhance disclosure around public company issuers’ cyber and climate risks, as well as for those companies seeking to go public via a special purpose acquisition company. The rules are grounded in materiality, according to the SEC, as investors need this information to make buying, selling, holding, and voting decisions.
Second, the SEC adopted rules requiring certain broker-dealers and investment advisers to notify customers of data breaches that might put personal information at risk. Finally, it enhanced transparency to the markets by regularly publishing aggregate, anonymized data regarding registered investment funds, private funds, and investment advisers.
Accounting and Auditing
During Gensler’s tenure, the Public Company Accounting Oversight Board overseen by the SEC, successfully negotiated a statement of protocol with Chinese market authorities to allow the board to fully inspect and investigate, for the first time, the auditors of China-related companies listed in the United States. For the last two years, the board has been able to fulfill its inspection and enforcement-related responsibilities as it relates to audit firms in China and Hong Kong.
Further, when Gensler took the helm of the agency in 2021, the board had only updated five of the standards it adopted on an interim basis when it was created 20 years ago. The interim standards had been carried over from existing American Institute of Certified Public Accountants standards, and the Sarbanes-Oxley Act envisioned that the board would update them soon after its creation. Since Gensler, the board has updated 18 interim standards and two other standards to reflect current accounting/auditing oversight needs.
Examinations and Enforcement
The Enforcement and Examinations divisions, which make up about half of the agency, has received more than 145,000 tips, complaints, and referrals during Gensler’s tenure. The SEC has awarded approximately $1.5 billion to whistleblowers; filed more than 2,700 enforcement actions; and obtained approximately $21 billion in penalties and disgorgement orders. Between fiscal years 2021 and 2024, the agency returned more than $2.7 billion to harmed investors as a result of enforcement actions.
Further, the SEC recovered more than $250 million for harmed investors through examination of investment advisers, investment companies, and broker-dealers, among others. The examinations division has also enhanced communication with registrants by sharing timely information about its annual priorities and proactively engaging with industry and other regulators.
Under Gensler, the SEC continued work begun by Jay Clayton, former chair, to protect investors in the crypto markets. The agency brought actions against crypto intermediaries for fraud, wash trading, registration violations, and other misconduct.
In the last full fiscal year, according to the SEC’s Office of the Inspector General, 18% of the SEC’s tips, complaints, and referrals were crypto-related, despite the crypto markets comprising less than 1% of the U.S. capital markets. The majority of courts agreed with the SEC’s actions to protect investors and rejected arguments that the SEC cannot enforce the law when securities are being offered.
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