Wed. Apr 21st, 2021

By Markie Gordon, AP Business writer

Washington (AP) – Securities and Exchange Commission President J. Biden’s choice is coming before a Senate panel for his confirmation hearing in a moment when a rowing stock-trading drama sparked uproar over Wall Street’s tight regulation.

Gary Gensler, a chairman of the Commodity Futures Trading Commission during the Obama administration, has experience as a tough market regulator during the financial crisis. Recently he has been in the academic world. Gensler’s selection of Biden to lead the SEC is aimed at moving the Wall Street watchdog agency to an active role after a sluggish role during the Trump administration.

The Senate Banking Committee is weighing Jenler’s confirmation at a virtual hearing on Tuesday. Rohit Chopra, a member of the Federal Trade Commission, is Biden’s nominee to head the Consumer Financial Security Bureau.

Gensler is promising to work towards strengthening transparency and accountability in markets. He will be able to “invest with confidence and protect people from fraud and manipulation,” he said in written testimony prepared for the hearing. This means promoting efficiency and competitiveness, so our markets operate with lower costs to companies and higher returns to investors. . … and above all, it means that our markets cater to the needs of working families. “

The trading frenzy of struggling video-game retailer Gamestop raised its price by 1,600% in January, although they later returned to Earth after days of wild prices. Many large hedge funds had bet that Gametop stocks would decline, only to be thwarted by small investors who banded together on social media with a wave of purchases that sent the price up. The saga was portrayed as a triumph of ordinary investors over the Wall Street giants. But some lawmakers alleged that online trading platform Robinhood acted in favor of its larger Wall Street customers when it blocked its customers from buying shares of GameStop on January 28.

The SEC is investigating. Treasury Secretary Janet Yellen convened a meeting of top federal regulators to discuss the unrest of the business and how the way the market operates could hurt individual investors.

Acting SEC chair Allison Heron Lee has said the agency is investigating the role that short-selling could play in GameTop’s extreme stock moves, as well as potential stock manipulation and whether stock issuing companies are investors. Disclosing the risk adequately for

The GameStop episode has gained political momentum towards closer regulation of securities markets, although Republican lawmakers and regulators will usually oppose the new rules. Potential avenues for the new rules that have been raised include disclosing short-selling positions to market players and restricting payment arrangements for order flows – a common practice in which payments to companies such as Wall Street trading firm Robinhood So that they can send their customers to place orders. .

Gensler was a leader and adviser to the transition team of the President of the Biden, responsible for the Federal Reserve, banking issues and securities regulation. He does not face enough opposition to get his approval by the full Senate, which Democrats control by a slim margin.

Eric Jenner, assistant businessman at the University of Michigan, says, “The Jenler will push the SEC away from making it easier for companies to raise money and protect non-sophisticated investors.”

Jay Clatten, a former Wall Street lawyer who led the SEC during the Trump administration, made a dire push to soften the rules affecting Wall Street and the financial markets, as President Donald Trump pledged when he assumed office . The rules were relaxed under the Dodd-Frank law that reinforced banks and Wall Street in the wake of the 2008–09 financial crisis and the Great Recession. Clayton also relaxed the rules for small companies raising capital in the market.

With a background of nearly 20 years working at Goldman Sachs, a Wall Street powerhouse investment bank, Gensler shocked many by becoming a strict regulator of large banks as head of the Commodity Futures Trading Commission. He monitored the worldwide market for $ 400 trillion for complex financial instruments that helped solve the 2008–09 crisis. Gensler pushed for stricter rules that big banks and financial firms had lobbied against, and he was not afraid to take positions that were confrontational with the Obama administration.

His potential priorities as SEC chairman would be for corporations to disclose their climate change risks, political spending, and executive compensation. Gensler, who co-authored a 2002 book of investment advice for middle-income people named “The Great Mutual Fund Trap”, could also push for protection in general investor relationships with his advisors. He said strict rules could be made for new “blank-check” offerings used by companies to raise money in markets.

Genslers are equipped with new financial technologies and receptiveness to cryptocurrencies. As a professor of economics and management at MIT’s Sloan School of Management, he has focused on public policy and research and teaching as the head of the global trend of digital currencies and blockchain, digital currency transactions.

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