The Securities and Exchange Commission (SEC) announced that its 33rd Chair, Gary Gensler, will step down from his position on January 20, 2025, marking the end of a tenure defined by ambitious reforms, high-stakes enforcement, and significant challenges in the evolving financial landscape. Appointed in April 2021, Gensler has been at the helm during a period of profound shifts in the U.S. capital markets.
Reflecting on his term, Gensler highlighted the agency’s mission-driven approach to safeguarding investors, promoting capital formation, and ensuring the resilience of the U.S. financial system. “It has been the honour of a lifetime to serve alongside the dedicated staff of the SEC on behalf of everyday Americans,” he stated, expressing gratitude to President Biden and his fellow commissioners for their support and collaboration.
Enhancing Treasury Market Stability
One of Gensler’s most notable achievements has been the enhancement of the U.S. Treasury markets, a critical component of the global financial system. With a valuation of $28 trillion, the Treasury market is a cornerstone of government financing and global financial stability. Under Gensler, the SEC introduced measures to promote central clearing and reduce exemptions for broker-dealers, thereby lowering systemic risk and improving market efficiency.
These reforms, which address vulnerabilities exposed during past market disruptions, aim to prevent cascading failures while ensuring that the U.S. financial system remains robust in times of stress.
Modernising the Equity Markets
During his tenure, the SEC enacted the first major updates to the $55 trillion U.S. equity markets in nearly two decades. Among the highlights was the transition to a one-day settlement cycle, reducing risks associated with trade finalisation and benefiting both investors and market participants.
The Commission also focused on narrowing bid-ask spreads and reducing trading fees, leading to greater efficiency. Rules were adopted to enhance transparency regarding brokers’ execution quality, empowering investors with more comprehensive information to make informed decisions.
Strengthening Market Resilience
Gensler’s administration placed a strong emphasis on resilience across all sectors of the financial markets. The SEC revised Form PF, requiring private fund advisers to report significant events more promptly. This change enhances the agency’s ability to monitor and address emerging risks in private equity and hedge fund sectors.
Additionally, reforms to money market funds were implemented, targeting liquidity and transparency to prevent future market stresses. These changes reflect a broader effort to bolster investor confidence in periods of economic uncertainty.
Corporate Governance Reforms
Corporate governance has been another focal point of Gensler’s tenure. The SEC updated rules surrounding insider trading, mandating stricter disclosures when corporate insiders sell shares. Measures were also adopted to ensure that executives return compensation tied to erroneously reported financials.
Shareholder rights saw an expansion through the introduction of universal proxy cards, allowing investors to vote for a preferred mix of board candidates during contested elections. These reforms aim to make corporate elections more equitable and transparent.
Advancing Disclosure Standards
Investor protection remained a priority, with the SEC rolling out rules to enhance disclosure standards for public companies. Issuers are now required to provide more detailed information on cyber risks, climate-related risks, and other material factors that could impact investment decisions.
For broker-dealers and investment advisers, stricter rules were introduced for notifying customers of data breaches. Transparency was further improved through the publication of anonymised data about registered investment funds, providing a clearer picture of market dynamics.
Progress in Accounting and Auditing
Gensler oversaw significant advancements in accounting standards and auditing practices. Under his leadership, the Public Company Accounting Oversight Board (PCAOB) reached a historic agreement with Chinese authorities, allowing full inspections of auditors of China-related companies listed in the U.S.
Domestically, the PCAOB accelerated the modernisation of its standards, replacing outdated interim measures with updated rules to reflect contemporary financial oversight needs.
Crypto Markets Under the Microscope
The cryptocurrency market posed a unique challenge during Gensler’s tenure. With digital assets representing less than 1% of the U.S. capital markets but generating 18% of enforcement tips and complaints, the SEC intensified its scrutiny of crypto intermediaries.
Enforcement actions targeted fraud, wash trading, and registration violations. These efforts, frequently upheld by U.S. courts, underscored the SEC’s commitment to enforcing securities laws across all asset classes. Critics, however, argued that the agency’s aggressive stance hindered innovation in the blockchain sector, a debate that is likely to persist beyond Gensler’s term.
Record Enforcement and Investor Protections
Under Gensler, the SEC demonstrated a robust commitment to enforcement. Between 2021 and 2024, the agency processed over 145,000 tips and complaints, resulting in more than 2,700 enforcement actions and $21 billion in penalties.
The whistleblower programme thrived, with $1.5 billion awarded to individuals whose information led to successful enforcement actions. These efforts returned over $2.7 billion to harmed investors, reaffirming the SEC’s role as a staunch defender of market integrity.
The Division of Examinations also played a critical role, recovering $250 million for harmed investors through proactive oversight of investment advisers and brokers.
Legacy and Future Challenges
Gensler’s tenure has been marked by both praise and criticism. Supporters laud his ambitious reforms and emphasis on transparency, while detractors argue that his regulatory agenda may have imposed excessive burdens on market participants.
As the SEC prepares for new leadership, the agency faces ongoing challenges, including the evolving role of artificial intelligence in trading, the growth of decentralised finance, and maintaining the U.S. capital markets’ global competitiveness.
A Distinguished Career
Gensler’s career prior to the SEC reflects a deep commitment to public service and financial reform. He served as Chair of the Commodity Futures Trading Commission during the Obama Administration, overseeing the implementation of reforms to the $400 trillion swaps market.
A key architect of the Sarbanes-Oxley Act, Gensler also held senior positions at Goldman Sachs before transitioning to academia, where he taught at MIT and advised on digital currency initiatives.
For his contributions, Gensler has received numerous accolades, including the U.S. Treasury’s Alexander Hamilton Award and the Frankel Fiduciary Prize.
Looking Ahead
As Gensler prepares to step down, the search for his successor will likely draw significant attention. The next SEC Chair will inherit a complex regulatory landscape shaped by rapid technological advancements and shifting market dynamics.
Gensler’s departure marks the end of a transformative era for the SEC. Whether his legacy will endure as a model of effective reform or as a cautionary tale of overreach will depend on how his policies withstand the test of time.
With the announcement of his departure, Gary Gensler leaves behind a record of both achievement and controversy. As the financial world speculates on his successor, one thing is certain: the challenges of regulating the ever-evolving capital markets are far from over.