In a statement, the SEC has announced that Chair Gary Gensler will step down from his position at noon on January 20, 2025. That’s of course the time when the new president is sworn in, so it’s not exactly a surprise. According to the WSJ, “Gensler’s decision to remain until the very end of the Biden administration probably disappoints some Republicans who wanted to see him leave sooner. It means he could try to push through some additional measures since Democrats will retain a majority on the five-member SEC as long as he stays.” In the statement, Gensler said that the SEC “is a remarkable agency….The staff and the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation, and ensuring that the markets work for investors and issuers alike. The staff comprises true public servants. It has been an honor of a lifetime to serve with them on behalf of everyday Americans and ensure that our capital markets remain the best in the world.”
The statement recites many of the accomplishments achieved during his tenure, including corporate governance and disclosure changes, such as changes to Rule 10b5-1, clawbacks, universal proxy, new disclosure rules regarding pay for performance, climate, cyber risks and SPACs; a negotiated agreement with Chinese market authorities to allow the PCAOB to inspect auditors of China-related companies listed in the U.S.; updating by the PCAOB of 18 interim and two other AICPA standards; “critical enhancements to the $28 trillion U.S. Treasury markets”; the “first significant updates to the $55 trillion U.S. equity market in nearly 20 years”; and reforms applicable to money market funds. The SEC also “received more than 145,000 tips, complaints, and referrals and awarded approximately $1.5 billion to whistleblowers. The Commission filed more than 2,700 enforcement actions and obtained approximately $21 billion in penalties and disgorgement orders. Between fiscal years 2021 and 2024, the agency returned more than $2.7 billion to harmed investors as a result of enforcement actions.”
Of course, we have no idea yet who will succeed Gensler as Chair. According to Fortune and Reuters, some of the names being floated are former Commissioners Dan Gallagher and Paul Atkins and current Commissioner Mark Uyeda, as well as former SEC general counsel Robert Stebbins. (Reuters reports that current Commissioner Hester Peirce has indicated that she is not interested.) Most have reportedly been critical of the current SEC’s approach to regulation of crypto.
Nor do we have any idea what will remain of the legacy of Gensler or any other SEC Chair after the new Administration is sworn in. This Opinion piece in the Wall Street Journal from the co-heads of the new Department of Government Efficiency contends that decisions by SCOTUS in West Virginia v. Environmental Protection Agency (2022) (giving its imprimatur to the “major questions” doctrine, see this PubCo post) and Loper Bright v. Raimondo (ending Chevron deference, see this PubCo post) “suggest that a plethora of current federal regulations exceed the authority Congress has granted under the law.” Their plan is to “work with legal experts embedded in government agencies, aided by advanced technology,” to identify these regulations and have the new President, “by executive action, immediately pause the enforcement of those regulations and initiate the process for review and rescission.” In their view, these actions “will be correcting the executive overreach of thousands of regulations promulgated by administrative fiat that were never authorized by Congress.”
