Wall Street has a new regulatory sheriff, Gary Gensler. The former Goldman Sachs partner, head of the Commodities Futures and Trading Commission (CFTC) and professor at MIT will become the next head of the Securities and Exchange Commission (SEC). Gensler’s estimated to be worth between $40 and nearly $120 million.
I guess you need a rich guy in the role. It wouldn’t be the first time. In fact, the first chair of the SEC was Joseph Kennedy, President John F. Kennedy’s father. Kennedy Sr. was appointed by Franklin Delano Roosevelt to the dismay of many. Americans weren’t too keen on the fact that Kennedy was known to have made a fortune by bootlegging alcohol during prohibition and later turned to Wall Street, where he was accused of being a stock market manipulator.
This small inconvenient fact didn’t deter Roosevelt’s decision. When questioned about appointing an accused stock market shyster, he calmly answered his critics saying, “Set a thief to catch a thief.”
According to the Financial Times, Gensler, who’s not accused of being a shyster will “have to address past failings” under the Trump administration. Over the past four years, the “SEC has been criticized for not being tough enough on corporate America and not adequately protecting investors.” It has allowed the marketplace to foster “scams and fraud,” which “have been on the rise during the Trump administration.”
The Wall Street Journal wrote, “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, his reputation as a bold regulator makes it likely he will beef up enforcement efforts and push for new disclosure rules, lawyers and former regulators said.”
The WSJ predicted, “As SEC chairman, he would likely take a different approach to rule-making than his predecessor. Under Mr. Clayton, the agency eased certain rules as 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.”
It’s anticipated that Gensler’s arrival will be a big difference from SEC chief Jay Clayton’s laissez faire attitude toward reigning in Wall Street. When Gensler was in charge of the CFTC, he wasn’t afraid to go after major financial firms and their executives.
Mercury Strategies consultant Justin Slaughter said, “The sheriff is coming to the preeminent financial regulator in the world. It means regulation and enforcement are about to get much tougher.” Some say, like Joe Kennedy, once Gensler’s made his fortune, it’s cool to go after everyone else.