Securities Regulation Daily Former CFTC head Gary Gensler tapped to helm SEC
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Tuesday, January 19, 2021

Former CFTC head Gary Gensler tapped to helm SEC

By Rodney F. Tonkovic, J.D.

The Obama-era CFTC head could have a chance to reshape the Commission and its regulatory priorities.

Gary Gensler has been named as the incoming Biden administration's pick to head the SEC. As the CFTC chairman, Gensler acquired a reputation as an energetic reformer, and a more recent academic focus on blockchain and other financial technologies could foretell a possible direction for the SEC. If confirmed, Gensler will replace Jay Clayton, who stepped down at the end of 2020. Commissioner Elad Roisman has served as acting chair of the agency since Clayton's departure.

CFTC chair. Gensler served as chairman of the Commodity Futures Trading Commission from 2009 to 2014. During that time, he led the agency through the passage and implementation of the Dodd-Frank Act. Following his service with the CFTC, Gensler was chairman of the Maryland Financial Consumer Protection Commission from 2017 to 2019.

Gensler's background is in economics and financial services, and he has been heading the transition team's agency review team for banking and securities. He is currently a Professor of the Practice of Global Economics and Management, MIT Sloan School of Management, Co-Director of MIT's [email protected] & Senior Advisor to the MIT Digital Currency Initiative, researching artificial intelligence, blockchain technology, and new financial technologies. Prior to entering public service, Gensler held a variety of roles over 18 years at Goldman Sachs. Subsequently, Gensler joined the Treasury Department, where he held several positions, then served as senior advisor to U.S. Sen. Paul Sarbanes in writing the Sarbanes-Oxley Act.

Senior staff vacancies. Due to a major exodus of many senior SEC officials in recent weeks, Gensler will have many roles to fill, providing a fresh slate to shape agency agendas. Among the vacancies are the directorships of nearly all of the SEC's main divisions: Corporation Finance, Economic and Risk Analysis, Enforcement, Investment Management, and Trading and Markets.

In a statement announcing Gensler's appointment, as well as appointments to fill other key administration posts, President-elect Biden said that Gensler and the other picks "will be a key part of our agenda to build back better—and I am confident they will help make meaningful change and move our country forward." Vice President-elect Harris added: "These remarkable public servants reflect the very best of our nation, and they will help us contain this pandemic, create an economy that works for working people, and rebuild our country in a way that lifts up all Americans."

Reaction to the appointment. In the wake of the announcement, a number of business and political figures have applauded the choice of Gensler. For example, Patrick McHenry (R-NC), Republican leader of the House Financial Services Committee, said that Gensler's "acceptance of financial technology and cryptocurrency is a welcome change" and that if confirmed, he would be willing to work with Gensler in keeping pace with the evolving nature of digital asserts. McHenry took the opportunity to add a caveat: "Any future Chair must work within the confines of the SEC's three-part mission and resist pressure to commandeer our securities disclosure regime to try to fix non-economic issues or social problems better addressed by legislators or other regulators. A shift away from the SEC's historical mission would only hurt American investors and small businesses."

On the business side, Dennis Kelleher President and Chief Executive Officer of Better Markets, said that the organization believes that Gensler is an outstanding choice. "As a deeply experienced expert in securities markets, Gary will be a smart, strategic and bold leader who will restore the SEC to the gold standard of enforcing the law without fear or favor," Kelleher said. He also asserted that during the previous four years, the SEC subordinated "investor's interests to the wish lists of the financial industry, corporate America and management" and that Gensler is a the "right choice to lead the SEC in a new direction." The North American Securities Administrators Association (NASAA) also issued a statement praising Gensler's nomination as a signal that "the Biden Administration expects the agency to hold those who harm investors accountable for their wrongdoing and to pursue a regulatory agenda that prioritizes investor protection and is supported by vigorous examination and enforcement efforts."

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