What the New SEC Head Means for Investors
Changes for the SEC
Gary Gensler, a veteran banker and regulator, was confirmed as the new Chairman of the Securities and Exchange Commission last week, and was sworn into office over the weekend.
Gensler’s appointment comes at a time when the stock market is surging, cryptocurrencies are gaining prominence, SPACs are becoming commonplace, and environmental investing is growing in popularity. Here’s what his appointment means for investors:
Gensler to Address Recent Stock Market Challenges
Gensler will be faced with several unique challenges in his new role. He will need to address recent stock market events including the GameStop (GME) buying spree and the collapse of Archegos Capital Management.
Gensler is known for being a tough regulator and is credited with overhauling the swaps market following the 2008 financial crisis. His supporters hope he will take a similar approach with the stock market. Many want him to pass regulations which will make public companies disclose more information to investors. The Trump Administration rolled back certain protections for investors and many Democrats want to bring them back.
“Consistency and Comparability” for Investors
Some lawmakers also want the SEC to require companies to disclose more information about threats to their business from climate change. Gensler indicated that he supports these initiatives. During his Senate confirmation hearing he said the SEC plays a role in bringing “consistency and comparability” when it comes to information available for investors.
At a time when many discussions are happening around cryptocurrency regulations, it’s worth noting that Gensler will help shape those conversations. As SEC chair, he will play a role in adding new regulations to the industry or determining how existing regulations should apply. “Bitcoin and other cryptocurrencies have brought new thinking to payments and financial inclusion, but they’ve also raised new issues of investor protection that we still need to attend to,” Gensler said during a confirmation hearing. “[I’ll] work with fellow commissioners to both promote the new innovation, but also at the core to ensure investor protection.”
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From climate change to trading, President Biden’s pick to head the SEC has a lot on his plate. With the way the markets have been behaving recently, Gensler will likely face more unexpected challenges in the coming months.
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