January 15, 2021
Reuters has reported that President-elect Biden will nominate Gary Gensler, former head of the Commodity Futures Trading Commission with a reputation for strict enforcement and imposing tough regulations, as Chairman of the Securities and Exchange Commission.
Gensler is known for strict enforcement actions and imposing tougher regulations. He previously served as the head of the Commodity Futures Trading Commission under President Obama and implemented many derivative market reforms following the 2008-09 financial crisis. Notably, he completed the rulemaking process in the wake of the financial crisis far more quickly than other regulatory agencies. He is currently advising the Biden transition team on financial industry oversight.
Gensler is seen as a more progressive pick for Biden’s economic team. His nomination was likely bolstered by the Democratic wins in Georgia, which will make confirmation by a majority vote much easier. Financial industry representatives have already expressed some reservations about Gensler’s nomination.
Outlook: Generally speaking, the SEC has provided flexibility for employers in the midst of the COVID-19 crisis. Still, Gensler would likely seek to undo several rules finalized under the Trump administration including shareholder proposal eligibility requirements and principles-based human capital disclosure rules. So far, unwinding the proxy advisory reform rules has not been highlighted, though the Association's Center On Executive Compensation believes the new rules are at risk. Progressive advocates will strongly encourage the SEC to mandate companies disclose more information about risks related to climate change (greenhouse gas emissions), workforce diversity, and corporate political spending/contributions.