Day Trading, Other Challenges Await Incoming SEC Chair

Incoming SEC Chair Gary Gensler is expected to face a number of challenges, including the recent market volatility caused by retail investor trading in GameStop and other stocks. Acting SEC Chair Allison Herren Lee along with SEC commissioners issued a release, stating in part the SEC “will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws,” but it is unclear what other actions besides reviewing market activity for violations the SEC can or will take. The Wall Street Journal reports that Gensler, who has been a finance professor at MIT since he left his role as chair of the Commodity Futures Trading Commission in 2014, will likely expect staff recommendations on the trading surge when Gensler takes office. Gensler faces several other challenges, including whether he will revise the proxy voting rules with respect to the role played by proxy advisors and the balance of power between companies and their shareholders; how quickly he will move on oversight of ESG metrics used by funds and other firms; and whether he will mandate ESG disclosure for companies. A recent MFDF webinar with experts from EY discusses in detail the regulatory issues for 2021.