Mr. Gensler Goes Back To Washington

TheSecurities and Exchange Commission gets new leadership.

Gary Gensler, who spurred the US Commodity Futures Trading Commission (CFTC) to action after the 2008 financial crisis, has now been tapped to chair of the Securities and Exchange Commission (SEC).

Many expect him to once again shake up Wall Street. Stock buybacks, political donations, shadow banking activities and even corporate environmental disclosures might draw the attention of Gensler, a former Goldman Sachs banker. Observers expect him to spark controversy.

Corporations may be in for more-stringent reporting requirements under a Gensler-led agency, especially since the Biden administration is expected to take a more aggressive stance with regard to climate change. Listed companies may have to disclose more extensively their environmental, social and governance risks in SEC filings, explaining how climate change could affect their profitability, for instance.

Gensler’s background is in markets and financial technology, not, like many of his predecessors, in enforcement or mergers and acquisitions. As a professor at MIT Sloan School of Management, for instance, he recently taught a course in blockchain technology and how it can transform markets. If confirmed, some close observers anticipate that he will be more open than his predecessor, Jay Clayton, to innovations like cryptocurrency-based exchange-traded funds, for instance.

As CFTC chair under former President Barack Obama, Gensler wrote tough new rules on swaps trades and exerted generally greater oversight of the derivatives market in the aftermath of the 2008 financial crisis. On the enforcement front, he helped bring charges against five financial institutions for manipulating the Libor, resulting in over $1.7 billion in corporate penalties.

At the SEC, Gensler can be expected to move “in the opposite direction” from Clayton, who was criticized as too easy on corporations at the expense of shareholders. That will mean “expanding and improving industry disclosures and restoring investor rights,” Tyler Gellasch, executive director of the investor-focused Healthy Markets coalition told Reuters.

“He is a tenacious regulator who stood up to the industry titans to rein in their risky behavior,” tweeted Sen. Elizabeth Warren, D-Mass., who had worked with Gensler after the 2008 financial crisis. “He will be an excellent SEC chair during this economic crisis.”