Senate Confirms Next SEC Chairman
The U.S. Senate voted 53-45 on Wednesday to approve President Joe Biden's nomination of Gary Gensler as chairman of the Securities and Exchange Commission.
The U.S. Senate voted 53-45 on Wednesday to approve President Joe Biden’s nomination of Gary Gensler as chairman of the Securities and Exchange Commission.
The SEC commissioners now have a 3-2 Democratic majority and are expected to tackle a number of issues including environmental, social, and corporate governance investing, cryptocurrency, and a fiduciary standard for brokers.
The SEC’s broker advice rule, Regulation Best Interest, was adopted in June 2019 as part of a package of rules designed to address the obligations of broker-dealers and investment advisers when they provide recommendations or investment advice to retail investors. The rule had a compliance date of June 30, 2020.
Without mentioning the regulation by name, Democrats took aim at Regulation BI in an early draft of its party platform that was released in mid-2020, and vowed to reverse the regulation if Biden beats President Trump in the 2020 election.
The SEC claims that Regulation Best Interest enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers, among other things, to act in the best interest of a retail customer when making a recommendation of any securities transaction. The SEC also requires brokers to provide clients with a standardized disclosure document about the nature of their relationship.
Opponents of the regulation argue that it does not define the “best interest” and exacerbates existing confusion among investors who are unsure about the standards their broker must observe. Proponents believe that the rule establishes a national standard that helps protect investors while preserving access to professional financial advice.
Dale Brown, president and chief executive officer of industry trade group Financial Services Institute, said “[Gensler’s] breadth of industry and regulatory experience will be valuable in guiding the SEC and expanding upon its recent accomplishments, including the implementation of Regulation Best Interest. We encourage Chairman Gensler to build upon Reg BI’s success and preserve its effectiveness for both financial advisors and the Main Street Americans they serve. We also ask that he ensures the Commission provides clear, consistent rulemaking and enforcement that is workable for all stakeholders…”
Gensler, a professor at the MIT Sloan School of Management, served as chairman of the Commodity Futures Trading Commission from 2009 to 2014 under President Barak Obama. After the passage of Dodd-Frank, he implemented new rules to regulate the $400 trillion swaps market following the 2008 financial crisis, and he oversaw the prosecution of investment banks in the Libor-rigging scandal.
He led the Biden-Harris transition agency review team responsible for financial industry oversight since November, and previously served as chief financial officer for Hillary Clinton’s presidential campaign. From 1999 to 2001, he served as the Under Secretary of the Treasury for Domestic Finance, and the Assistant Secretary of the Treasury for Financial Markets from 1997 to 1999.
Prior to his public sector career, Gensler was the co-head of finance at Goldman Sachs.
