WEBVTT - Gary Gensler 0:00:02.880 --> 0:00:05.840 The current chairman of the SEC is Gary Gensler, who 0:00:05.880 --> 0:00:09.480 headed the CFTC under President Obama. Gary is a former 0:00:09.520 --> 0:00:12.360 partner at Goldman Sachs, a former professor at M I T, 0:00:12.920 --> 0:00:15.920 and a very well recognized expert on the financial markets. 0:00:16.160 --> 0:00:18.040 I had a chance to sit down with him recently 0:00:18.239 --> 0:00:21.000 to talk about some of the key issues facing the SEC, 0:00:21.400 --> 0:00:24.720 including how to regulate cryptocurrencies and how to deal with 0:00:24.760 --> 0:00:29.200 the enormous new technologies affecting our markets. Your main principle 0:00:29.240 --> 0:00:32.640 though the SEC, as I understand it, is fairness and 0:00:32.760 --> 0:00:37.040 disclosure and equity. Everybody is treated the same. Everything is fair, 0:00:37.080 --> 0:00:40.720 everything is disclosed, and do not rate the relative merits 0:00:40.720 --> 0:00:43.320 of investments. That's the principle, right, yeah, I mean we 0:00:43.320 --> 0:00:46.960 we talk about it as a three part mission investor protection, 0:00:47.159 --> 0:00:51.720 which embodies much of what you just said, facilitating capital 0:00:51.760 --> 0:00:56.200 formation companies that are raising money entrepreneurs, but also those 0:00:56.240 --> 0:00:58.800 of us who are homeowners and take out a mortgage. 0:00:58.840 --> 0:01:01.840 We are issuers as well. We're raising money. And then 0:01:01.880 --> 0:01:04.959 that which is in the middle fair, orderly and efficient 0:01:05.000 --> 0:01:09.040 markets investors, capital formation, and then the markets in the middle. 0:01:09.160 --> 0:01:12.440 So since the Great market recession, the Great Recession of 0:01:12.440 --> 0:01:14.360 two thousand and eight and two thousand nine, at which 0:01:14.400 --> 0:01:17.080 time you were then the head of the CFTC, which 0:01:17.080 --> 0:01:21.120 regulates commodities and futures. Since that time, the markets have 0:01:21.280 --> 0:01:26.000 changed dramatically because of technology developments. Are you thinking that 0:01:26.080 --> 0:01:28.800 the SEC and other regulators have been able to keep 0:01:28.840 --> 0:01:33.080 up with all these technological changes. It's it's a real challenge, David, 0:01:33.560 --> 0:01:38.440 for across our government to stay up with the remarkable innovations. 0:01:39.280 --> 0:01:43.240 The last time we updated our rules for the stock markets, 0:01:43.280 --> 0:01:46.160 the equity markets was in a significant way, was in 0:01:46.200 --> 0:01:49.840 two thousand and five, and sixteen years later. Those rules 0:01:49.880 --> 0:01:53.120 that may have been fit for purpose, then are they 0:01:53.200 --> 0:01:56.480 really ready for the twenties? And nearly half of our 0:01:56.520 --> 0:01:59.960 stock market does not trade in the transparent what's called 0:02:00.200 --> 0:02:03.640 lit exchanges like the New York Stock Exchange or NASTAC, 0:02:04.080 --> 0:02:07.080 but they're in dark polls or their host salers. So 0:02:07.120 --> 0:02:09.480 I've asked staff, well, what can we do to update 0:02:09.520 --> 0:02:13.840 these markets for thees given the rapid change of technology. 0:02:14.480 --> 0:02:17.520 So let's talk about that particular change. You have said, 0:02:17.560 --> 0:02:20.040 and others have said that the markets are supposed to 0:02:20.080 --> 0:02:22.440 be equitable and fair to everybody, but so much on 0:02:22.520 --> 0:02:25.800 the markets are now controlled. Some people say by limited 0:02:25.919 --> 0:02:29.080 number of market makers who may not give everybody the 0:02:29.120 --> 0:02:32.079 fairest price. That's the argument that some people make. How 0:02:32.120 --> 0:02:33.400 are you going to deal with that? And is it 0:02:33.520 --> 0:02:38.519 a big concern or is it a modest concern? Well, um, 0:02:38.560 --> 0:02:42.080 it's it's important I think an agency like ours to 0:02:42.400 --> 0:02:47.320 constantly bring up today our rule set, So I would 0:02:47.360 --> 0:02:50.000 say it is a central concern if I can use 0:02:50.040 --> 0:02:54.400 a different word than you did about our regular investors. 0:02:54.400 --> 0:02:58.280 And we've seen an increase of retail UH participation, but 0:02:58.320 --> 0:03:02.640 are regular investors as well? Is the big institutions having 0:03:03.080 --> 0:03:06.760 efficient markets? And are they getting what's called best execution? 0:03:06.800 --> 0:03:09.560 We wrote a rule years ago about that you're supposed 0:03:09.560 --> 0:03:12.400 to get best execution out of your broker. And is 0:03:12.440 --> 0:03:15.960 that happening when, as you said, a few wholesalers are 0:03:16.080 --> 0:03:19.160 buying the order flow and and a lot of that's 0:03:19.200 --> 0:03:23.200 getting concentrated around a few host salers. Let's talk about 0:03:23.200 --> 0:03:26.840 some other technology changes since you were lasting government. One 0:03:26.880 --> 0:03:29.959 of them is something called us spack um uspac is 0:03:30.000 --> 0:03:32.959 a new device to enable somebody to go public without 0:03:32.960 --> 0:03:35.640 going through the normal I P O process. Does that 0:03:35.960 --> 0:03:38.400 offend you that people are going around the I P 0:03:38.520 --> 0:03:40.600 O process you have at the SEC or do you 0:03:40.640 --> 0:03:44.360 say okay as long as some disclosure occurs. But I 0:03:44.400 --> 0:03:48.560 think that uh we we at the SEC are committed 0:03:48.600 --> 0:03:52.800 to be technology neutral and innovations uh like special purpose 0:03:52.800 --> 0:03:56.520 acquisition companies, which actually have been around for quite some time. 0:03:56.880 --> 0:03:59.480 It's just they took off in the last two years 0:04:00.040 --> 0:04:02.280 and and there's been hundreds of them, as you know, 0:04:02.560 --> 0:04:06.080 and well over a hundred billion dollars raised through these 0:04:07.320 --> 0:04:12.600 fundamentally blank check companies. UM, what we're looking at is 0:04:12.640 --> 0:04:16.720 how do we guard the public not just in disclosure, 0:04:16.839 --> 0:04:21.560 but also there's very significant fees the sponsors generally take 0:04:21.600 --> 0:04:26.040 about as a promote. They have two years to invest 0:04:26.080 --> 0:04:29.039 the money. Uh. They're encouraged to invest the money because 0:04:29.080 --> 0:04:33.120 they want to get that uh. And then what sort 0:04:33.120 --> 0:04:35.680 of conflicts does that set up? What due diligence are 0:04:35.680 --> 0:04:40.800 they doing when they're buying those target companies. Having said that, 0:04:41.040 --> 0:04:44.520 we're looking at how we can bring some greater disclosure 0:04:44.760 --> 0:04:48.800 transparency and deal with some of those inherent conflicts. Now, 0:04:48.800 --> 0:04:51.960 there's another issue that has arisen, which is called gamification, 0:04:52.520 --> 0:04:55.400 which is to say people are making a game out 0:04:55.400 --> 0:04:58.160 of trying to buy stocks, and very young people are 0:04:58.480 --> 0:05:01.080 caught up in it. You have very very on day traders. 0:05:01.320 --> 0:05:04.880 Are you worried about this phenomenon? So, if I could 0:05:04.920 --> 0:05:07.560 take just a step back, we live in the ties 0:05:07.920 --> 0:05:11.920 in a new digital age where where applications on our 0:05:11.960 --> 0:05:17.040 phones can use massifcial amount of data and then predict 0:05:17.200 --> 0:05:20.479 our behavior. And this is true outside of finance and 0:05:20.560 --> 0:05:24.000 inside of finance. Outside of finance, the streaming apps figured 0:05:24.000 --> 0:05:26.520 out a while ago that I'm kind of a romcomp 0:05:26.600 --> 0:05:30.880 type of guy. Okay, that's figured out now in this space, 0:05:31.040 --> 0:05:35.280 whether it's a robo advisor or a brokerage app, if 0:05:35.279 --> 0:05:39.839 they figure out by giving you David Rubinstein a certain signal, 0:05:39.960 --> 0:05:43.279 a certain color, a certain prompt of behavioral prompt that 0:05:43.400 --> 0:05:46.760 you might trade more or you might buy a higher 0:05:47.240 --> 0:05:51.520 revenue product for them, there in lies and potential conflict. 0:05:51.560 --> 0:05:56.080 What do we do when the digital algorithms are maximizing 0:05:56.160 --> 0:06:01.039 for the company's revenues rather than our return earns. And 0:06:01.120 --> 0:06:04.440 so we're trying to think that through. It's not just gamification, 0:06:04.520 --> 0:06:06.920 it's a little bit more than that. It's whether there's 0:06:06.920 --> 0:06:12.120 a conflict between the app and our investment returns. CEOs 0:06:12.200 --> 0:06:15.760 today are more outspoken than they used to be about 0:06:15.760 --> 0:06:19.360 public policy issues. Is that something that the SEC thinks 0:06:19.440 --> 0:06:21.960 is a good thing? Or should CEO is just worry 0:06:22.000 --> 0:06:24.919 about the share price and earnings and things like that, 0:06:25.040 --> 0:06:28.640 or should they comment on voting rights or climate change things? 0:06:28.800 --> 0:06:31.560 What do you think CEO should do? We hear from 0:06:31.680 --> 0:06:35.600 market participants. That helps us be better at what we do. 0:06:35.640 --> 0:06:41.360 We hear from advocates all across the market and all 0:06:41.400 --> 0:06:44.920 across the political spectrum. That helps the five of us 0:06:44.960 --> 0:06:47.320 in a commission to hear from the public. So, whether 0:06:47.360 --> 0:06:51.440 it's a chief executive officer or it's somebody who's buying 0:06:51.440 --> 0:06:54.960 the first fifty shares of stock in a company, do 0:06:55.080 --> 0:06:57.960 we benefit from hearing from folks? And and my my 0:06:58.160 --> 0:07:02.839 call list are made public on a monthly basis, you'll 0:07:02.839 --> 0:07:06.120 see that some CEO is getting get in touch. They 0:07:06.160 --> 0:07:09.440 want to They want to say something about Maybe it's 0:07:09.480 --> 0:07:12.880 about equity market structure, maybe it's about climate risk disclosure. 0:07:12.920 --> 0:07:15.600 Maybe it's about what we talked about earlier about spacks 0:07:15.720 --> 0:07:20.320 or crypto. And we don't have to necessarily agree. We 0:07:20.440 --> 0:07:23.640 try to when we disagree, to disagree agreeably. As my 0:07:23.720 --> 0:07:27.240 uncle Norman used to say, UM, but but it's helpful 0:07:27.280 --> 0:07:31.239 to hear from UH people in the markets. So today, 0:07:31.600 --> 0:07:34.880 what would you like Most people who are not knowledgeable 0:07:34.880 --> 0:07:37.960 about the SEC but are watching this interview, they want 0:07:38.000 --> 0:07:39.560 to learn a little bit. What would you like them 0:07:39.600 --> 0:07:45.080 the most know about the SEC? Markets work best when 0:07:45.080 --> 0:07:48.160 we have rules of the road. I think that those 0:07:48.200 --> 0:07:52.239 of us at the SEC are entrusted UH to ensure 0:07:52.400 --> 0:07:55.840 that the markets is the best they can are, free 0:07:55.840 --> 0:07:59.520 of fraud, free of manipulation, that you as investors get 0:07:59.560 --> 0:08:03.400 to decide what risk you take. Now, many companies that 0:08:03.440 --> 0:08:05.800 are based in China are now traded I think in 0:08:05.840 --> 0:08:08.640 the New York Stock Exchange or NASDAC, but they are 0:08:08.680 --> 0:08:12.520 not subject, as it turns out, to accounting oversight in 0:08:12.560 --> 0:08:15.600 the same way that American companies are. Are you worried 0:08:15.640 --> 0:08:17.440 about that? Is there anything you think you can do 0:08:17.480 --> 0:08:20.840 about that? Was? You and I are both Baltomore boys, 0:08:20.960 --> 0:08:24.800 so we both remember fondly Paul Sarbans, who was our 0:08:24.880 --> 0:08:28.440 senator here in Maryland for well I think thirty years 0:08:29.040 --> 0:08:33.800 and and Paul and Republican Mike Ox that came together 0:08:34.440 --> 0:08:38.920 in two thousand and two. President UH George W. Bush 0:08:39.240 --> 0:08:42.240 worked with them when something called the Sarbanes ox The Act, 0:08:42.280 --> 0:08:45.840 and there was another basic bargain. That basic bargain was, 0:08:45.880 --> 0:08:49.040 if you wanted to raise money from the public, not 0:08:49.160 --> 0:08:51.880 only did you have to provide financials that were audited, 0:08:52.480 --> 0:08:57.240 but your auditor had to be subject to inspection. Basic bargain. 0:08:57.520 --> 0:09:02.640 So to your story is, nearly twenty years later, companies 0:09:02.720 --> 0:09:06.920 from fifty plus jurisdictions have allowed their books and records 0:09:06.960 --> 0:09:10.480 to be looked at, inspected in essence the auditors to 0:09:10.520 --> 0:09:15.920 be audited. Two jurisdictions have not, China and Hong Kong. 0:09:16.920 --> 0:09:21.600 And so Congress last year said, all right, enough is enough, 0:09:21.920 --> 0:09:24.199 and they set a three year clock in place, a 0:09:24.320 --> 0:09:29.120 three year clock year one that if we can't work 0:09:29.200 --> 0:09:32.800 this out, if the auditing firms of these China related 0:09:32.840 --> 0:09:36.880 companies don't open up their their work papers, then what 0:09:37.000 --> 0:09:40.120 Congress said, then we have to suspend trading. That these 0:09:40.120 --> 0:09:43.960 companies should not be able to access US markets through 0:09:44.080 --> 0:09:47.680 our stock exchanges in the like. So you're too modest 0:09:47.720 --> 0:09:52.000 to point this out, But Senator starbins principal staff person 0:09:52.080 --> 0:09:56.000 drafting this Starbins Oxley was Gary Gensler. So you know 0:09:56.240 --> 0:09:59.679 this all pretty well, right, Yeah, there were there were 0:09:59.720 --> 0:10:04.880 other involved as well, and I learned working for a senator. 0:10:04.920 --> 0:10:07.080 I mean it was all there. If it went well, 0:10:07.120 --> 0:10:09.720 it was theirs. But if it went pear shaped, of 0:10:09.760 --> 0:10:13.520 course it was maybe the staffs um but yes, I 0:10:13.559 --> 0:10:16.040 do know it. It was. It was after Enron and 0:10:16.120 --> 0:10:18.680 world Com failed, and so Congress stepped in and said 0:10:18.679 --> 0:10:21.800 they had to change this and up up the game, 0:10:22.520 --> 0:10:26.959 up the rigor with regard to auditing in the United States. So, 0:10:27.040 --> 0:10:29.560 as you pointed out, both both of us were from Baltimore, 0:10:29.640 --> 0:10:31.560 though we didn't know each other growing up. I'm a 0:10:31.760 --> 0:10:34.839 you know, ten years plus older than you. So you 0:10:34.960 --> 0:10:37.880 I grew up in Baltimore. Were you in a very 0:10:37.920 --> 0:10:40.680 wealthy family or was it a blue collar family? What 0:10:40.840 --> 0:10:43.920 kind of family was it? Well, neither of my parents 0:10:43.920 --> 0:10:46.640 went to college. In fact, my grand folks didn't. Three 0:10:46.640 --> 0:10:49.120 of them didn't even go to high school. But my 0:10:49.200 --> 0:10:53.040 dad started a small business out of UH with his 0:10:53.160 --> 0:10:56.719 mustering out pay after World War Two. And while I 0:10:56.800 --> 0:10:59.400 never had more than I think three dozen employees, it 0:10:59.520 --> 0:11:02.319 was a ven in business in the bars of Bottomore 0:11:02.360 --> 0:11:05.600 and so forth. It sent all of us UH kids 0:11:05.640 --> 0:11:09.640 to college. It helped pay down the mortgage over the years. Uh, 0:11:09.679 --> 0:11:14.679 and um, we we lived a good life around this 0:11:14.760 --> 0:11:17.720 small business and through the community of Pikesville that I 0:11:17.720 --> 0:11:20.679 grew up in. So you were four other siblings, one 0:11:20.679 --> 0:11:22.960 of whom is your twin brothers that right? Yeah, I 0:11:22.960 --> 0:11:25.360 have an identical twin brother. Watch out if he goes 0:11:25.440 --> 0:11:28.960 on TV. So who's smarter? Are you or your twin brother? 0:11:29.200 --> 0:11:33.760 How Rob is? So you went to uh, Pikesville High School, 0:11:33.760 --> 0:11:35.679 a very well known high school in that area. I 0:11:35.720 --> 0:11:37.600 assume you're near the top of your class. And you 0:11:37.640 --> 0:11:41.520 went to University of Pennsylvania undergrad Is that right? Yeah? Yeah, 0:11:41.640 --> 0:11:43.920 Rob went there as well. We both went to Wharton, 0:11:44.360 --> 0:11:46.720 had a faithful decision. He had gotten in a little 0:11:46.720 --> 0:11:49.440 earlier than I and I was. I was accepted. We 0:11:49.440 --> 0:11:52.160 were both kind of math kids, and I was accepted 0:11:52.200 --> 0:11:55.080 to M I T and Uh, my twin brother had 0:11:55.080 --> 0:11:57.680 gone to Wharton already accepted, and then on a faithful 0:11:57.760 --> 0:12:00.680 day decided to go the same place. It's worked out 0:12:00.720 --> 0:12:02.600 for me and I ended up at m I team 0:12:02.600 --> 0:12:05.880 many years later. So, so you graduated after working and 0:12:05.920 --> 0:12:09.680 then you went right to Goldman Sachs. Yes, I joined 0:12:09.679 --> 0:12:11.880 a group called the Merger and acquisition area. It was 0:12:11.920 --> 0:12:15.440 about a dozen people headed by Steve Friedman and Jeff 0:12:15.480 --> 0:12:18.800 Blasi at the time, who you might have later known, uh. 0:12:18.840 --> 0:12:21.920 And then it grew. It was throughout thees grew rapidly, 0:12:22.120 --> 0:12:24.720 and you became one of the earliest or youngest partners 0:12:24.720 --> 0:12:28.520 at Goldman. Is that right? I was honored to uh 0:12:28.880 --> 0:12:31.199 make it into the partnership while I was in the 0:12:31.280 --> 0:12:34.600 merger and acquisition area. That's right. So you're a partner 0:12:34.600 --> 0:12:36.600 at Goldman. You're making a great deal of money by 0:12:36.679 --> 0:12:39.920 any normal human standards. Why did you leave Goldman? Sachs. 0:12:41.000 --> 0:12:45.080 I my time there was I spent eighteen years there. 0:12:45.160 --> 0:12:47.480 I did a number of things, not just this merger 0:12:47.480 --> 0:12:49.760 and acquisition area, but I went to the trading side. 0:12:49.840 --> 0:12:52.920 I went and helped run part of the back office. 0:12:53.840 --> 0:12:59.280 It was really just a remarkable experience and opportunity. But 0:12:59.360 --> 0:13:03.760 I felt I felt some connection to public service, maybe 0:13:03.840 --> 0:13:06.479 as a as a kid that was a class treasurer 0:13:06.520 --> 0:13:10.520 and lost for senior class president. UM. I always had 0:13:10.600 --> 0:13:14.679 this connection and I thought public service was uh something 0:13:14.760 --> 0:13:17.800 if I had the opportunity, I wanted to be part of. Well. 0:13:17.840 --> 0:13:22.319 One of my mentors, uh, one of my bosses at 0:13:22.360 --> 0:13:26.880 Goldman Sachs. Bob Rubin had been chosen by President Clinton 0:13:27.080 --> 0:13:29.760 first to be as National Economic Advisor and later as 0:13:29.800 --> 0:13:34.080 Treasury Secretary and UH Secretary. Reuben knew I'd be a 0:13:34.120 --> 0:13:37.920 soft touch for service, and when President Clinton won a 0:13:37.960 --> 0:13:42.240 second term, UH, an opportunity arose. I I guess I 0:13:42.400 --> 0:13:46.160 competed for it, but an opportunity arose, and I went 0:13:46.280 --> 0:13:50.680 down to the Clinton Treasury as an Assistant Secretary for 0:13:50.720 --> 0:13:53.760 Financial Markets. And I haven't looked back. It has been 0:13:53.920 --> 0:13:57.160 It's been a terrific twenty four years. So after you 0:13:57.320 --> 0:14:01.040 left the Clint administration when it ended, UH, did you 0:14:01.080 --> 0:14:02.960 decide to go back in the investment world or what 0:14:03.000 --> 0:14:05.840 did you do? Now? The first The first thing I did, 0:14:05.840 --> 0:14:09.520 along with a colleague from the Treasury Department, is we 0:14:09.559 --> 0:14:12.280 wrote a book. UH. We We thought of it as 0:14:12.280 --> 0:14:15.599 a common sense book on investing, which really was promoting 0:14:16.000 --> 0:14:19.440 the use of low cost index funds for people that 0:14:19.600 --> 0:14:23.800 have UH just their their retirement savings and saving for 0:14:24.560 --> 0:14:27.640 their futures. So that was the first thing. And then 0:14:27.640 --> 0:14:30.720 I started working with Plus Sarbanes on that what you 0:14:30.800 --> 0:14:36.000 said became this accounting law called Sarbanes Oxley and then 0:14:36.360 --> 0:14:39.560 ultimately President Obama is elected and he asked you to 0:14:39.560 --> 0:14:42.160 be the head of the CFTC. Is that right? Yeah? 0:14:42.200 --> 0:14:48.760 I had been working on UH then's UM Senator Clinton's campaign, 0:14:48.840 --> 0:14:51.800 the two thousand and eight campaign as a senior advisor. 0:14:51.880 --> 0:14:54.840 So I was particularly honored that he that he reached 0:14:54.840 --> 0:14:58.680 out and his you know, gave me the opportunity to 0:14:58.720 --> 0:15:01.760 serve once again. So when you head of the CFTC, 0:15:02.040 --> 0:15:04.560 as I mentioned earlier, we were going through a recession, 0:15:04.640 --> 0:15:06.640 so you had to pick up a lot of pieces 0:15:06.640 --> 0:15:09.160 of failed investments and so forth. Was that a more 0:15:09.280 --> 0:15:12.800 challenging position than the one you have now? Um? At 0:15:12.800 --> 0:15:18.160 the SEC They're they're they're both remarkable organizations. The CFTC 0:15:18.440 --> 0:15:22.640 is of course smaller, and the CFTC is interesting. It 0:15:22.720 --> 0:15:27.160 was set up to oversee commodity futures or derivatives for 0:15:27.320 --> 0:15:30.240 corn and wheat, and then in the nineties seventies it 0:15:30.360 --> 0:15:34.400 was expanded to energy products and yes, interest rate products 0:15:34.400 --> 0:15:38.240 and and even the S and P five hundred stock future. 0:15:38.360 --> 0:15:42.800 So so these these these derivative products, but an innovation 0:15:42.880 --> 0:15:46.680 had come up called swaps and swaps which are very 0:15:46.720 --> 0:15:51.320 similar to UH futures. Another form of derivative had not 0:15:51.480 --> 0:15:54.680 been regulated, and in the middle of that crisis, that 0:15:54.800 --> 0:15:57.920 two thousand and eight crisis, credit to fought swaps and 0:15:58.000 --> 0:16:02.960 swaps lead to some of the the instability in our markets. 0:16:03.400 --> 0:16:06.840 So working with Tim Guitner, working with Mary Shapiro at 0:16:06.840 --> 0:16:10.680 the SEC, working with all the members of Congress actually 0:16:10.720 --> 0:16:16.320 across the aisle, we cobbled together reforms for this swap market. Now, 0:16:16.960 --> 0:16:19.880 you had a very impressive career, and it's still very impressive, 0:16:19.920 --> 0:16:22.040 but at one point you had a tragedy. Your wife 0:16:22.040 --> 0:16:25.120 passed away and you had to raise your three daughters 0:16:25.200 --> 0:16:28.360 essentially by yourself. So how did you do all that 0:16:28.400 --> 0:16:30.800 while you were doing all these other things. Well, I'm 0:16:30.800 --> 0:16:32.480 not sure I did it all that well, but I 0:16:32.560 --> 0:16:35.520 was actually off the grid. So we lost Francesca in 0:16:35.560 --> 0:16:38.320 two thousand and six. She had first had cancer when 0:16:38.360 --> 0:16:41.200 we were Uh, I guess you'd said kids. I mean, 0:16:41.760 --> 0:16:44.760 she wasn't but thirty when she first had cancer and 0:16:44.800 --> 0:16:47.920 we were dating. We were blessed to go on and 0:16:47.960 --> 0:16:51.080 get married have three wonderful daughters. But we did lose 0:16:51.120 --> 0:16:55.000 Francesca to cancer in two thousand and six, and I 0:16:55.040 --> 0:16:57.880 was kind of off the grid, and uh, for three 0:16:57.960 --> 0:17:01.480 or four years, pretty much stay at home dad or 0:17:01.640 --> 0:17:03.760 your daughters, any of them now influence to go in 0:17:03.800 --> 0:17:10.959 the financial services world. No one's a remarkable uh artist, 0:17:11.000 --> 0:17:15.040 a political cartoonist and artist, ones a PhD and culture anthropology, 0:17:15.040 --> 0:17:19.560 and one's working in immigration law. So President Biden, he 0:17:19.600 --> 0:17:22.080 asked you to head up the SEC. Were you interested 0:17:22.080 --> 0:17:23.600 in doing that? At the time you were teaching m 0:17:23.640 --> 0:17:25.960 I t UM. You finally got your taste of m 0:17:26.000 --> 0:17:28.240 I t So why did you decide to leave m 0:17:28.280 --> 0:17:31.040 I t and coming and run the SEC? One when 0:17:31.040 --> 0:17:33.960 a president asked you to do something, It's really hard 0:17:34.000 --> 0:17:35.879 to say no. Let me let me just say that. 0:17:35.920 --> 0:17:39.600 But it's also just an incredible privilege and an honor. 0:17:40.520 --> 0:17:44.760 I've been around capital markets my whole adult life, uh, 0:17:45.040 --> 0:17:47.240 starting as I said, as a twenty one year old 0:17:47.240 --> 0:17:51.800 at Coleman Sachs, and here some four decades later, I've 0:17:51.880 --> 0:17:55.560 asked once again to serve. It's a hard thing to 0:17:55.600 --> 0:17:57.760 say no to. I will say this though, being a 0:17:57.760 --> 0:18:03.200 professor UH at m I is an incredible experience, the 0:18:03.320 --> 0:18:07.000 vibrancy of that student body, the faculty, the stayff so. 0:18:08.000 --> 0:18:11.359 But even there, I was studying the intersection of finance 0:18:11.400 --> 0:18:13.800 and technology. I was spending a fair amount of time 0:18:14.400 --> 0:18:19.439 on that intersection and the new innovations around fintech and 0:18:19.440 --> 0:18:25.040 then more precisely around artificial intelligence and also cryptocurrency sort 0:18:25.040 --> 0:18:28.439 of that it's started with the Setosian Nakamoto white paper 0:18:28.480 --> 0:18:31.040 thirteen years ago. Well, let's talk about that. You did 0:18:31.080 --> 0:18:33.800 teach an M I t about things that you don't 0:18:33.840 --> 0:18:38.399 like to use this word cryptocurrency, I guess, but essentially cryptocurrencies. 0:18:38.600 --> 0:18:40.800 What is the SEC doing about that? Is? Is it 0:18:40.880 --> 0:18:45.560 is are cryptocurrencies are security or are they not a security? 0:18:45.640 --> 0:18:47.880 Is it a currency or is it? What is it? 0:18:47.880 --> 0:18:52.760 It's clear if if you're using this new technology to 0:18:52.880 --> 0:18:55.919 raise money from others and those other people that the 0:18:55.960 --> 0:19:01.240 public are anticipating profits based on the efforts that that 0:19:01.280 --> 0:19:05.200 brings it into this what's called an investment contract. Congress 0:19:05.240 --> 0:19:08.439 back to back to nineteen thirty three and nineteen thirty four, 0:19:08.840 --> 0:19:12.920 Congress painted with a very broad brush, David. They painted 0:19:12.920 --> 0:19:16.280 with a broad brush to protect the public from fraud 0:19:17.160 --> 0:19:20.320 when people were raising money from the public, and the 0:19:20.359 --> 0:19:24.120 public is in anticipating a profit based on those individuals 0:19:24.200 --> 0:19:27.480 raising the money. So it look it depends on the 0:19:27.520 --> 0:19:33.960 facts and circumstances. It depends obviously on each individual uh token, 0:19:34.359 --> 0:19:38.600 But many of these, uh, maybe even the majority of 0:19:38.640 --> 0:19:42.000 them are tokens raising money from the public, where the 0:19:42.040 --> 0:19:46.080 public is anticipating profits based on the efforts of the 0:19:46.720 --> 0:19:49.720 others that promoters. So should we anticipate that you will 0:19:49.760 --> 0:19:53.080 have regulations clarifying what the sec is going to do 0:19:53.200 --> 0:19:57.720 on cryptocurrencies and related kinds of things in the near future. 0:19:59.119 --> 0:20:03.919 I actually think it's it's it's pretty clear. Uh. My predecessor, 0:20:04.000 --> 0:20:07.760 Jake Clayton uh said this more than once that he 0:20:07.800 --> 0:20:10.040 thought it was pretty clear that many of these tokens 0:20:10.080 --> 0:20:12.680 maybe actually his words where he hadn't really seen many 0:20:12.760 --> 0:20:18.960 that weren't securities. What what we've asked the trading platforms, 0:20:19.000 --> 0:20:23.440 the lending platforms, the other various venues to come in 0:20:23.640 --> 0:20:27.800 to work with us to get registered under the securities laws. 0:20:27.840 --> 0:20:30.880 Because of a platform has fifty or some of them 0:20:30.920 --> 0:20:35.359 five hundred tokens on their platform, probabilities are they're not 0:20:35.520 --> 0:20:40.719 all uh, non securities. How do you get ideas from 0:20:40.720 --> 0:20:42.800 the White House? I mean, you were appointed by the president, 0:20:42.840 --> 0:20:45.639 you're the head of an independent agency, but of the 0:20:45.640 --> 0:20:47.960 White House, House policies, do they call you up or 0:20:48.000 --> 0:20:50.119 you basically once the president the point of view, you 0:20:50.119 --> 0:20:53.119 don't see him. Again. We work very closely with the U. S. 0:20:53.160 --> 0:20:56.840 Department at Treasury, with the other financial regulators, of course 0:20:56.880 --> 0:21:00.760 they're sibling market regulator, the CFTC and the back regulators 0:21:00.760 --> 0:21:05.280 in the Federal Reserve. And I'm I'm a member of 0:21:05.280 --> 0:21:09.359 something called the Financial Stability Oversight Councils again, something Congress 0:21:09.400 --> 0:21:13.160 set up after the o A crisis. And yet we're 0:21:13.160 --> 0:21:17.320 an independent agency where if we write a role and 0:21:17.400 --> 0:21:20.720 certainly if we do enforcement actions, we we don't. We 0:21:20.840 --> 0:21:23.640 don't check in with the White House. And that's by 0:21:23.840 --> 0:21:28.480 Congress's will. Congress wrote the law that way. And um, 0:21:28.640 --> 0:21:32.080 so there's a certain independence from that. Uh, that daily 0:21:32.760 --> 0:21:36.240 back and forth with President Biden. Isn't calling you saying 0:21:36.280 --> 0:21:39.120 good job, Gary, You're really doing a good job there right, Well, 0:21:39.160 --> 0:21:42.720 you know, I wouldn't, I wouldn't probably uh want to 0:21:42.720 --> 0:21:45.640 disclose any of that. But that's a that's a would 0:21:45.680 --> 0:21:50.000 be a pretty unusual president sec uh Chair. I mean, 0:21:50.040 --> 0:21:52.959 I know my predecessor may have played golf or something, 0:21:53.000 --> 0:21:56.480 but that's not happening here. Speaking of golf, how do 0:21:56.560 --> 0:21:59.000 you stay in shape? You look like you're pretty fit. 0:21:59.080 --> 0:22:00.840 I mean, well, how do you percise or stay in 0:22:00.880 --> 0:22:03.720 shape when you're chamber of the SEC. Well, you're kind, 0:22:03.800 --> 0:22:07.879 You're kind to say that. I've been a lifelong uh runner, 0:22:07.960 --> 0:22:10.840 and I learned a little bit of athleticism that decision, 0:22:10.880 --> 0:22:13.520 that faithful decision to go to University of Pennsylvania because 0:22:13.520 --> 0:22:16.359 my twin brother was there. Because also I ended up 0:22:16.359 --> 0:22:19.880 being at cocks In for crew, and I learned from 0:22:19.920 --> 0:22:22.800 coach Ted Nash this incredible sense of he was an 0:22:22.800 --> 0:22:26.840 Olympic horseman and Olympic gold medalist, this incredible sense of 0:22:26.840 --> 0:22:30.119 of of that it's important to think about our body 0:22:30.160 --> 0:22:32.280 as well. So I try. I even to this day, 0:22:32.280 --> 0:22:34.439 I try to still get out and run. I'm not 0:22:34.480 --> 0:22:38.359 as good a runner as I once was. Um, I've 0:22:38.400 --> 0:22:40.679 done a fair amount of biking in my life, and 0:22:40.760 --> 0:22:44.200 mountain climbing and trekking. My eldest daughter and my youngest 0:22:44.240 --> 0:22:46.320 daughter and I have all sort of trek together. My 0:22:46.680 --> 0:22:50.400 middle daughter, the anthropologist doesn't like that bit, but these 0:22:50.440 --> 0:22:52.240 are some of the things I try to do. So 0:22:52.400 --> 0:22:54.760 the pleasure of being the Chairman of the SEC is 0:22:54.760 --> 0:22:56.960 what you've obviously been trained for it. Why do you 0:22:57.040 --> 0:22:59.639 enjoy doing this? Because it's a twenty four hour day 0:22:59.720 --> 0:23:01.800 kind of job, you're always gonna have critics. Why do 0:23:01.840 --> 0:23:04.080 you enjoy this job? I assume you do enjoy it. 0:23:04.359 --> 0:23:07.720 You know, I do enjoy it, David. I think, Look, 0:23:07.720 --> 0:23:11.480 everybody's gonna find their passion. I was intrigued and interested 0:23:11.520 --> 0:23:14.720 in finance. I was my twin brother, and I guess 0:23:14.840 --> 0:23:18.760 got you know, gift of math and numbers, and but 0:23:18.880 --> 0:23:22.040 I was also always like felt like that what we 0:23:22.119 --> 0:23:26.399 can do to leave our world a better place? You know, 0:23:26.480 --> 0:23:28.520 when when when when we get to the end of 0:23:28.520 --> 0:23:31.199 our lives and look back, it's our family, it's our 0:23:31.240 --> 0:23:33.760 loved ones, it's our friends, And to me, can we 0:23:33.840 --> 0:23:37.240 leave the world a little bit better off? And that's 0:23:37.320 --> 0:23:39.720