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Biden’s Candidate for SEC Chairman Is Expected to Be Tough on Companies

Gary Gensler could beef up the regulator’s enforcement efforts and push for new disclosure requirements.

1/27/2021 2:15:00 PM

Gary Gensler, President Biden’s pick to run the agency that oversees U.S. securities markets, is expected to spur higher fines and new disclosure requirements for public companies

Gary Gensler could beef up the regulator’s enforcement efforts and push for new disclosure requirements.

Jan. 27, 2021 5:30 am ETGary Gensler, President Biden’s pick to run the Securities and Exchange Commission, is expected to seek higher fines and new disclosure requirements on public companies, lawyers and former regulators say.Mr. Bidennominated Mr. Gensler

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earlier this month to head the agency that oversees U.S. securities markets, succeeding Jay Clayton. The Senate needs to confirm his choice for it to take effect, a process for which there is still no confirmed timeline. Last week, Mr. Biden named SEC Commissioner Allison Herren Lee

to serve as acting chairwomanin the interim.Mr. Gensler headed the U.S. Commodity Futures Trading Commission from 2009 to 2014, at which time he spearheaded the creation of a new regulatory framework for derivatives. Prior to running the CFTC, he had spent 18 years at Goldman Sachs Group Inc., where he rose to co-head of finance, and later served in the Treasury Department during the Clinton administration.

If confirmed, Mr. Gensler will likely be tasked with toughening regulation of U.S. public companies and the finance industry. Although he hasn’t outlined his plans for the role yet, hismakes it likely he will beef up enforcement efforts and push for new disclosure rules, lawyers and former regulators said.

Newsletter Sign-upCFO JournalThe Morning Ledger provides daily news and insights on corporate finance from the CFO Journal team.PREVIEWSUBSCRIBEFinance chiefs already anticipate spending more time and money to comply with new disclosure requirements in the next few years, said Howard Berkenblit, a partner at law firm Sullivan & Worcester LLP. “They’re bracing themselves for more regulation,” he said.

The SEC’s rule-making process usually starts with a proposal that the five commissioners vote on. If a majority agrees to advance the initiative, the public gives feedback, followed by another tally among the commissioners. The SEC under Mr. Gensler will have a three-to-two Democratic majority.

Observers said they expect the agency to ask companies for additional insights, including into issues such as climate-change risk, workforce diversity and political spending. Mr. Biden campaigned on forcing publicly traded businesses to provide more details

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on environmental risks and greenhouse-gas emissions. He also said he would require these companies to disclose data on the composition of their boards. At the moment, only some U.S. companies provide environmental, social and governance information.A spokeswoman for the Biden administration and a spokesman for the SEC declined to comment. Mr. Gensler didn’t respond to requests for comment.

As SEC chairman, he would likely take a different approach to rule-making than his predecessor. Under Mr. Clayton, the agencyeased certain rulesas part of a shift toward more principles-based, company-specific disclosures to simplify information for investors. Now, the SEC could return to strict, prescriptive rule-making again.

“Everyone should expect that a Gensler SEC will be under pressure from Capitol Hill to distinguish itself from a Clayton SEC by being perceived as tougher and smarter,” said Joseph Grundfest, a professor of law and business at Stanford University and a former SEC commissioner.

Mr. Gensler, who is teaching courses on financial technologies at the Massachusetts Institute of Technology, will likely bring new ideas on how to detect patterns and issues in enforcement or examination work, lawyers said. To increase the SEC’s enforcement powers, Mr. Gensler is expected to ask Congress for more resources, lawyers said.

Read more: The Wall Street Journal »

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I hope we see jail time for these crimes and not the same BS 'fines'. That dude is clearly a reptile. Attacks on the capitalist system are part of the transition to communism man!! For a moment I thought Mark Zuckerberg grew old fast. Will 'appear' to be tough on companies with a side wink. Politically connected companies have nothing to worry about. he even human? Yikes! How does he feel about an army of retailers taking down hedge funds? horrible Good. If its true. Lol.