The Committee on Banking, Housing and Urban Affairs is holding its confirmation hearing for Gary Gensler as SEC Chairman (link HERE). Gensler will need to demonstrate that he will be tough on individuals and companies that violate capital market integrity. We are confident that Mr. Gensler understands the relevant questions to ask (even if Senator Pat Toomey and other members of the committee clearly do not), about how to maintain market integrity in the face of market disruption caused by Fintech and social media companies. Questions around high-frequency trading/payment for order flow/best execution, market manipulation, SPAC fee structure and disclosures and other subjects are many during this period of market froth. However, we are not confident that Mr. Gensler will follow through with tough penalties including the removal of influential CEOs and senior executives from their respective seats when warranted based on his history.
When Mr. Gensler led the U.S. Commodity Futures Trading Commission (CFTC) he levied fines against the banks who participated in the LIBOR scandal a decade ago. This practice has become all too common whereby financial institutions and non-banking corporations frequently face fines but rarely have to admit guilt much less have their respective senior leadership removed. We recently covered this topic in our TEK2day article: How To Restore Integrity To The Capital Markets.