Biden To Nominate Gary Gensler To Head SEC, Reports Say

Gary Gensler will be nominated to chair the U.S. Securities and Exchange Commission (SEC) by President-elect Joe Biden, Reuters reported Tuesday.

The appointment is likely to prompt concern among Wall Street firms of tougher regulation.

Gensler was chair of the Commodity Futures Trading Commission (CFTC) from 2009 to 2014, and since November has led Biden’s transition planning for financial industry oversight.

At the CFTC, Gensler implemented dramatic new swaps trading rules mandated by Congress following the 2007-2009 financial crisis, developing a reputation as a hard-nosed operator willing to stand up to powerful Wall Street interests, Reuters noted.

Following the November election, Tom O. Gorman, partner at the Dorsey & Whitney law firm, told InsuranceNewsNet that Biden likely would shy away from an SEC chair with a hardline regulatory or prosecutorial background.

Financial firms have enjoyed the relatively light regulatory leanings of Jay Clayton, SEC chairman appointed by President Donald Trump.

Prior to joining the SEC, Clayton was a partner at Sullivan & Cromwell, where he was co-head of the firm’s corporate practice. His four years at the helm were relatively quiet, with Reg BI being perhaps the agency's most significant accomplishment.

The SEC rule took effect June 30 and, so far, with little fanfare or disruption to the brokerage industry.

Reg BI requires the following factors be considered in developing a recommendation for a retail customer: the customer’s investment profile, potential risks and rewards, and costs. It also includes a new "customer relationship summary" disclosure between broker and customer.

One reason the rule has not caused much disruption is the SEC's commitment to a soft rollout. The agency said it is merely looking for brokers and firms to make an initial "good faith effort" to comply.

A Biden-influenced SEC could also look to beef up disclosure rules on issues it considers important, Gorman said, such as climate change. In September, the CFTC released a task force report urging all financial regulators to “move urgently and decisively” to confront the “serious emerging risks to the U.S. financial system” posed by climate change.

SEC regulations on these disclosures are "having no impact," Gorman said.