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Gary Gensler Is Picked to Lead S.E.C.

  • January 18, 2021

For the past three years, Mr. Chopra has served as a commissioner of the Federal Trade Commission, often offering a dissenting voice against the Republican majority, arguing instead for tougher enforcement action against companies like Facebook.

At the S.E.C., one of Mr. Gensler’s most pressing decisions will be choosing a director of enforcement — an important position in setting regulatory priorities. But the incoming administration and congressional Democrats, who will control both chambers, have already laid out a number of them.

Mr. Biden has spoken about requiring companies to disclose more information about their environmental impact, while members of Congress have discussed limiting corporate share buybacks and asserting greater control over so-called shadow banking activities by hedge funds and private equity firms.

“This entire administration is prioritizing climate change with respect to what each agency can bring to the table to help us in the fight against climate change — and the S.E.C. has a really critical role in that regard,” said Mary Schapiro, the former S.E.C. chairwoman who worked closely with Mr. Gensler when he was at the commodities regulator. Ms. Schapiro cited climate, along with trading and market structure issues, as likely to be among the priorities for Mr. Gensler.

When Mr. Gensler took over the helm of the C.F.T.C., it had a lackluster reputation mostly limited to bringing enforcement actions against small trading firms. There were even calls in Congress for it to be merged with the S.E.C. But Mr. Gensler’s stewardship in the aftermath of the 2008 financial crisis quieted those criticisms. His agency often shared the spotlight with the S.E.C. — and at times even overshadowed it.

Under his leadership, the C.F.T.C. cracked down on manipulation by big banks of Libor — the London Interbank Bank Offered Rate — which is used to set interest rates on many bank loans. Working in tandem with the Justice Department, Mr. Gensler and the C.F.T.C. extracted big fines from banks and led to a plan to replace Libor with a new benchmark that is less subject to abuse.

The C.F.T.C. also shared the stage with the S.E.C. in investigating the so-called flash crash of 2010, when the Dow Jones Industrials fell 1,000 points in just 10 minutes — a record drop at the time. A joint investigative report by the two regulators never pinpointed an exact cause, but found that a combination of high-frequency trading and rapid trading in E-mini stock futures — a sophisticated exchange traded fund — contributed to the turmoil.

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