President Joe Biden appears to be getting the SEC and CFTC that he wants after a bumpy transition period, and a rush of departures as the new team takes over.
For starters, the Biden team has nominated Gary Gensler, the former chairman of the CFTC, to be the next chairman of the SEC. Gensler served as CFTC chairman from May 26, 2009, to January 3, 2014, and led an overhaul and expansion of the regulator’s control over derivatives trading, especially swaps.
While Gensler awaits his confirmation process, the new administration has named Allison Herren Lee, an SEC commissioner, as the acting chair of the SEC.
Lee, who became a commissioner on July 8, 2019, “has written, lectured, and taught courses internationally on financial regulation and corporate law,” according to the SEC.
In addition, she has served on the SEC staff for more than a decade in various roles such as counsel to Commissioner Kara Stein and as senior counsel in the Division of Enforcement’s Complex Financial Instruments Unit.
“During my time as Commissioner, I have focused on climate and sustainability, and those issues will continue to be a priority for me,” Lee said in a prepared statement when she became the acting chair.
Lee did not waste time as she appointed key executive staff members, including Satyam Khanna, who was named senior policy advisor for climate change issues, and environmental, social, and governance (ESG) matters.
Khanna will be advising the regulator on ESG matters “and advance related new initiatives across its offices and divisions,” according to SEC officials.
The SEC reports that Khanna was most recently a resident fellow at NYU School of Law’s Institute for Corporate Governance and Finance and served on the Biden-Harris Presidential Transition’s Federal Reserve, Banking, and Securities Regulators Agency Review Team.
This will be Khanna’s second stint at the SEC as he previously served as a member of the agency’s Investor Advisory Committee, where he served on the Investor-As-Owner Subcommittee, officials say.
At the CFTC, members of the commission unanimously elected Commissioner Rostin Behnam to serve as the Acting Chairman until a replacement for Heath P. Tarbert is found.
Tarbert has served as chairman since July 15, 2019, and stepped down last month. However, he will stay on as a CFTC commissioner as his term lasts until April 13, 2024, CFTC officials say.
“The work of the CFTC is critical to supporting the stability and growth of the American economy through strong oversight and regulation of derivatives markets. As a commissioner,” Behnam said in a prepared statement. “I have focused on ensuring our rules prioritize customer protections, examining potential systemic market risk, and gaining a better understanding of what regulators can do to address climate-related financial market risk.”
Behnam’s term as a commissioner began July 13, 2017, and is set to expire June 19, 2021. While there has been speculation in the media, the Biden team has not yet officially nominated a replacement for Tarbert. A nominee is most likely to be announced soon.
The Biden team by its actions appears to be reshaping the SEC and CFTC to be more assertive about enforcement and fines, and more open to the new regulatory implications of cryptocurrencies, climate change, and ESG.
Covering the regulators has never been dull — just a challenge to make sense of the legalese. But things may become more intriguing soon.