Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Thank you SEC Chair
Speaker 1: Gary Gensler for to be with you. Er, We're so
Speaker 1: excited to have you. I want to start with the
Speaker 1: uphill battle.
Speaker 2: Some would say you faced at the helm of the
Speaker 2: SEC in terms of you have this very ambitious agenda,
Speaker 2: one of the most ambitious we've seen at the SEC
Speaker 2: in years, but it's faced a lot of legal troubles,
Speaker 2: pushback from Wall Street Corporate America.
Speaker 1: A stat here as I have is your rules.
Speaker 2: Are facing a record number of court challenges. So given
Speaker 2: that backdrop and the legal hurdles you faced, how would
Speaker 2: you grade this SEC? Is it an a foreffort or
Speaker 2: would you say it's a bit more?
Speaker 3: Look, Anne Marie, I'm proud to be in this road.
Speaker 3: It's a privilege every day to fight on behalf Americans,
Speaker 3: investors and issuers, and it's really that. It's like William Douglass,
Speaker 3: our third chair and went on to be on the
Speaker 3: Supreme Court, said, we're the investor's advocate, but we also
Speaker 3: look out for people raising money, the issuers, the folks
Speaker 3: in the middle, some of whom are in this room,
Speaker 3: the broker dealers, the stock exchange is the investment advisors
Speaker 3: and so forth. Ultimately, the investors and issuers are their customers,
Speaker 3: and we are trying to update the rules for the
Speaker 3: twenty twenties. Now we put out an agenda of about
Speaker 3: fifty to fifty five items to do. By the way,
Speaker 3: my predecessor Jay Clayton did sixty four, but we have
Speaker 3: already finalized and implemented really consequential rules, like in the
Speaker 3: last couple of weeks implemented shortening the settlement cycle in
Speaker 3: half to one day from two days. That means if
Speaker 3: an investor sells their stock on a Monday, they get
Speaker 3: their cash Tuesday. They don't have to wait till Wednesday.
Speaker 3: But we also did a lot around corporate governance, how
Speaker 3: insiders sell their stock in the market, and some important
Speaker 3: rules there to restrict the use of non public information
Speaker 3: or even sing down some challenges that we had with
Speaker 3: China and China being in our markets and in the
Speaker 3: cyber world that public companies have to report material cyber events.
Speaker 3: But also we just finalized a rule that all of
Speaker 3: us in this room, if our information at a broker dealer,
Speaker 3: investment advisor gets hacked, they have to give us a
Speaker 3: notice on that. I mean these are things that are
Speaker 3: consequential that we've been able to be successful. So I
Speaker 3: think it's a great agency and we continue basically fighting
Speaker 3: on behalf of the American investor and American issue.
Speaker 2: So the most recent reboot, though, came from the Fifth Court,
Speaker 2: which I think you know about, of course, your attempt
Speaker 2: to regulate private equity funds and also protect private investors
Speaker 2: like pension funds.
Speaker 1: This is what the panel had to say.
Speaker 2: From the court quote, it exceeded the statutory authority by
Speaker 2: adopting the rule.
Speaker 1: So now what's your next move? What's your spons today?
Speaker 3: Well, one is we do everything within the law and
Speaker 3: how courts interpret the law. We're still assessing and looking
Speaker 3: at that ruling out of the Fifth Circuit down in
Speaker 3: Texas and Louisiana, Mississippi, and so we're still assessing that
Speaker 3: as a commission. But at its core, what we were
Speaker 3: really saying there was investors in private funds, which has
Speaker 3: grown to thirty trillion dollars in assets under management. Investors
Speaker 3: in those funds, the limited partners would get quarterly disclosures
Speaker 3: about their fees, performance and arrangements with others, so called
Speaker 3: side letters, and it was under authority that was put
Speaker 3: into law under DoD Frank. The court had a different
Speaker 3: view of that new authority. But we're still assessing what
Speaker 3: to do. But we do everything again a marie within
Speaker 3: the with the law is and how courts interpret it,
Speaker 3: and if need be, we pivot.
Speaker 2: What are the risks to the financial system, say that
Speaker 2: this doesn't happen and blocked are good.
Speaker 3: At the core, what we were seeking to achieve as
Speaker 3: a commission was greater transparency to investors, not to the public,
Speaker 3: but to the investors in these funds, and who's behind
Speaker 3: those investors, those endowment funds, those pension funds. They're the teachers,
Speaker 3: they're the firefighters in every single state in the US,
Speaker 3: They're the university's endowments that are investing in these finds.
Speaker 3: And so it was really about greater transparency, instilling greater
Speaker 3: competition and an important part of the capital markets.
Speaker 1: This came from the fifth circuit. You mentioned Texas.
Speaker 2: A lot of these rebooks that are coming to the SEC,
Speaker 2: are going through and to.
Speaker 3: Other agencies right across the administrative state. You're seeing more
Speaker 3: filings and in a couple of maybe leading in certain circuits.
Speaker 2: So what's your response to that that a lot of
Speaker 2: this is happening through Texas, Louisiana.
Speaker 1: Does it feel political.
Speaker 3: To you, Well, we respond in whatever court we're in,
Speaker 3: and I deeply believe in our democracy, parties have a
Speaker 3: right to go into court. We're a law enforcement agency.
Speaker 3: We bring seven or eight hundred law enforcement actions a year,
Speaker 3: many of them settled with some of them that go
Speaker 3: into court, and we really respect the courts and follow
Speaker 3: what they say.
Speaker 2: We also have frozen right now the emissions disclosures because
Speaker 2: that's also facing a ton of lawsuits. So SEC decided
Speaker 2: to freeze them. What happens if they become unfrozen? How
Speaker 2: quickly do companies need to disclose these kind Just.
Speaker 3: A little background. We're a disclosure agency. We're a securities agency.
Speaker 3: And what President Roosevelt pulled together with Congress ninety years ago.
Speaker 4: We just had our ninetieth birthday. It was kind of cool.
Speaker 3: And what they pulled together is that investors get to
Speaker 3: decide on what investments they want, and that we the
Speaker 3: SEC are merit neutral. Further, we are not a climate regulator.
Speaker 3: We are not an environmental regulator. We're not an ESG regulator.
Speaker 3: We're securities regulator. But what we found when I came
Speaker 3: into office, many investors are investing in companies based on
Speaker 3: their climate risk disclosures. And of the top thousand market
Speaker 3: cap companies so called Russell one thousand, ninety percent already
Speaker 3: are making disclosures around climate risk, and nearly sixty percent
Speaker 3: are already making some disclosures around greenhouse gas emissions.
Speaker 4: That would you.
Speaker 3: Asked therein I think we had a role and what
Speaker 3: we finalized a rule to say if material It's only
Speaker 3: if material, investors would need to make those disclosures to
Speaker 3: their investors, because the investors are already making decisions.
Speaker 4: But you're right, it's front of a court.
Speaker 3: I'm not going to get ahead of our really terrific
Speaker 3: lawyers who will have a chance to lay out that
Speaker 3: in front of a course.
Speaker 2: I guess the question I have is will there be
Speaker 2: a timeline that companies will know that they need.
Speaker 1: To start disclosing this.
Speaker 2: How quickly can you move with the rules once it's
Speaker 2: out of the court.
Speaker 3: Yeah, Marie, it's a good question, of course. It relates
Speaker 3: to what a court tells us. We laid out a
Speaker 3: set of implement it's called implementation timeline over a course
Speaker 3: of several years, depending upon what the court says. We
Speaker 3: did stay the rule, so that means it's stayed. But
Speaker 3: once we hear from the courts, Well, I think you've
Speaker 3: got a good question.
Speaker 1: So another place that you've been trying to tighten the rule.
Speaker 4: Sorry if we didn't make news there.
Speaker 2: Yeah, so it's okay, maybe here we can.
Speaker 1: And a lot of people are interested in this.
Speaker 2: There's a lot of messages when you tweeted that you
Speaker 2: were going to be doing this conference, a lot of
Speaker 2: messages from the crypto community.
Speaker 1: This is a place that you've tried to also tighten
Speaker 1: the rule.
Speaker 3: One hundred and twenty trillion dollar capital markets and lo
Speaker 3: and behold, I made it six minutes and fifteen seconds.
Speaker 4: And now you bring up.
Speaker 1: Crypto, Well there's some other you know, other leg to
Speaker 1: get used.
Speaker 3: It gets clicks for Bloomberg.
Speaker 1: Well, people are, people are.
Speaker 2: Interested in this, and actually it's becoming a political issue.
Speaker 2: So but I first want to talk about how do
Speaker 2: you reconcile broadly going after some of the issues in
Speaker 2: the industry at the same time as approving things like
Speaker 2: the bitcoin ETF and potentially the theory of ETF.
Speaker 3: So in terms of these exchange traded products, any investor
Speaker 3: can express themselves and purchase bitcoin, for instance. And when
Speaker 3: I came to the agency in twenty one, actually there
Speaker 3: were some filings around mutual funds and they ultimately led
Speaker 3: to bitcoin futures exchange traded funds. Those have been around
Speaker 3: for three years. The courts ruled around something called spot
Speaker 3: exchange traded products. I know it's kind of technical, but
Speaker 3: ruled that we should be consistent. We pivoted, we approve
Speaker 3: those in January. I would say this, what the investing
Speaker 3: public has now is an exchange traded product on regulated
Speaker 3: stock exchanges. Now, let me compare that to how people
Speaker 3: generally buy crypto. They're buying it or selling it often
Speaker 3: on non compliant platforms. Why do I say non compliant?
Speaker 3: These platforms also include significant number of tokens, and without
Speaker 3: pre judging any one of them, many of them are securities.
Speaker 4: Because it's the law of the land.
Speaker 3: We follow the Supreme Court's law the land regarding this.
Speaker 3: There's fifteen twenty thousand various tokens and they're offered investment
Speaker 3: contracts schemes that are investment contracts. And you look at it,
Speaker 3: the American public is not getting the proper disclosure that
Speaker 3: they are required to get by law, but they need
Speaker 3: we're merit neutral. But you all, if you're investing, if
Speaker 3: you're listening to the public, you're not getting the.
Speaker 4: Disclosure that you're supposed to get.
Speaker 3: And the intermediaries in the middle of the market, those
Speaker 3: so called exchanges are broker dealers and so forth. If
Speaker 3: they've got hundreds of offerings on that platform, think about it,
Speaker 3: how many of those offerings don't have some group of
Speaker 3: entrepreneurs in the middle. It's a sort of blize logic.
Speaker 3: The result this is a field that the leading lights
Speaker 3: from a couple of years ago are either in jail,
Speaker 3: about to go to jail, or waiting extra day.
Speaker 4: Think about it. This is that field.
Speaker 3: That's the field right now where the public has really
Speaker 3: been harmed and there's significant non compliance in the field.
Speaker 3: And so yes, we're bringing that in front of courts
Speaker 3: and those will play out because folks that are not
Speaker 3: complying with the law hurt the American public.
Speaker 1: But still you're approving ETFs.
Speaker 2: And the one I think there's a lot of excitement
Speaker 2: around is this ethereum ETF because we could potentially see
Speaker 2: it very soon.
Speaker 3: Will they are actually just so I can help you
Speaker 3: out there. As of last year, was already an ethereum
Speaker 3: exchange traded fund based on ethereum futures. Ethereum futures have
Speaker 3: been trading on the Chicago Amercantile Exchange.
Speaker 4: For three or four years.
Speaker 3: We actually UH went live last year and Ethereum futures ETF.
Speaker 3: But yes, we had five filings around cash ethereum exchange
Speaker 3: traded products. Again, I apologize to be that technical, but
Speaker 3: these already exist in some form. But we approve those filings.
Speaker 3: What is in front of us, and it's done at
Speaker 3: a staff level, is what's called the registration statements, the
Speaker 3: disclosure statements. And again these disclosures are really important. They're
Speaker 3: important to investors making investment decisions.
Speaker 1: Will we see that in the next few weeks.
Speaker 3: I don't know the timing, but it's going smoothly. You
Speaker 3: can almost follow it publicly. You see these filings, Bloomberg
Speaker 3: then report so on them, you get more clicks.
Speaker 1: Do you think we'll see it before the election.
Speaker 3: Again, I'm not trying to determine what the staff is doing,
Speaker 3: but it's going smoothly, and I just envision it at
Speaker 3: a staff level and smoothly play out and it's really
Speaker 3: about not the asset managers making the full disclosure so
Speaker 3: that those registration statements can go effective.
Speaker 4: And those lawyers know what that is.
Speaker 3: It's something our Division of Corporation Finance handles hundreds or
Speaker 3: if not thousands of times over anybody's career.
Speaker 4: It's smoothly functioning.
Speaker 3: It's really up to the asset managers to make the
Speaker 3: proper disclosures.
Speaker 2: Back to some of the crypto companies, though a lot
Speaker 2: of them have moved abroad to places like London and Singapore.
Speaker 1: So in that sense, do you think.
Speaker 2: That investors are actually safe because they're still innovating and
Speaker 2: they're still out there in the marketplace, which is not
Speaker 2: in the United States.
Speaker 3: So the extent that they're operating within the basic protections
Speaker 3: of providing the full disclosure what Roosevelt called complete disclosure,
Speaker 3: he called the Securities First Securities Act, the Truth and
Speaker 3: Securities Act. If they're really telling the truth about it,
Speaker 3: and they're making the disclosures and properly registered, and then
Speaker 3: if the intermediaries are operating within the law without the
Speaker 3: conflicts and looks. So much of this field is highly centralized.
Speaker 3: It's not decentralized. That's not what's happening here. It's highly
Speaker 3: centralized around a few platforms that are also centralizing and
Speaker 3: commingling things that we would never allow anywhere else, and
Speaker 3: we don't. The law doesn't allow you to be trading
Speaker 3: against your customers and operating a so called exchange and
Speaker 3: trading in front and possibly also taking investments in a
Speaker 3: investment contract or security and then listing and getting the
Speaker 3: listing pop. I mean, these are all happening potentially at
Speaker 3: these and again we see some of the leading you know,
Speaker 3: two years ago that would have filled a room much
Speaker 3: bigger than this if they were sitting on the stage
Speaker 3: or now sitting in jail or waiting jail.
Speaker 1: Part of the reason why oh I say.
Speaker 3: This and you but this is a serious thing. These
Speaker 3: are a lot of folks that are not living within.
Speaker 4: Our securities laws.
Speaker 3: But they're not necessarily living within our Bank Secrecy Act
Speaker 3: around any money laundering, and they're not necessarily living within
Speaker 3: the Commodity Exchange Act. Like this is a field that's
Speaker 3: sort of built up on a business model that it's
Speaker 3: a non compliant model, and it's not tiki tacky. It's
Speaker 3: about real protections for investors and for other people that
Speaker 3: want to access the capital markets. It's about trust in
Speaker 3: those capital markets.
Speaker 1: As you know.
Speaker 4: Have I been clear?
Speaker 1: Yeah, you're being very clear. As you know.
Speaker 2: Crypto, though, is becoming almost an election issue. There's reports
Speaker 2: that foreign President Trump is going to speak at this
Speaker 2: big bitcoin conference. He said that he will end quote
Speaker 2: Joe Biden's Warren crypto.
Speaker 1: And there's one more.
Speaker 2: It's become such a big deal that Mark Cuban is
Speaker 2: actually said that you, mister Gensler, could quote.
Speaker 1: Literally cost Joe Biden the election. What's your response to this.
Speaker 3: I'm going to be easy with them, Maria. I don't
Speaker 3: speak about elections.
Speaker 1: You don't have a response to mister Cuban.
Speaker 3: I just I just really look My role as a
Speaker 3: securities regulator is chair of this great five thousand person
Speaker 3: agency that oversees one hundred and twenty trillion dollar capital markets.
Speaker 3: We are here to look out for investors, look out
Speaker 3: for issuers, and we're appropriate to.
Speaker 4: Be a cop on the beat. And we have a
Speaker 4: set of rules that are pretty clear.
Speaker 3: There's nothing inconsistent about crypto securities and the securities laws. Unfortunately,
Speaker 3: there's a number of people that are non compliant with
Speaker 3: the laws.
Speaker 1: Let me ask it in a different way.
Speaker 2: Are you surprised by the political movement we've seen around crypto?
Speaker 4: Again? I mean, I'm a securities regulator.
Speaker 3: I'm focused every day on that part of my job,
Speaker 3: which is protecting the investors, looking out for issuers access
Speaker 3: to markets, fair, orderly and efficient markets. And with all respect,
Speaker 3: I hope your listeners undersaid that's my role.
Speaker 4: Other people can speak about elections.
Speaker 2: So the election is coming up, though, And although your
Speaker 2: term although M agree, although your term goes beyond November fifth,
Speaker 2: is there something you want to get done? Do you
Speaker 2: feel like you're up against the clock to get something
Speaker 2: done before the presidential election.
Speaker 4: Look, it's such a privilege to be in this role.
Speaker 4: I really mean it.
Speaker 3: I can't believe I'm serving my third president and been
Speaker 3: through Senate confirmation six times and all this.
Speaker 4: I just can't believe that.
Speaker 3: And every day I think is a privilege to help
Speaker 3: the American public, our clients three hundred and thirty million Americans.
Speaker 3: It's about chasing down insider trading. It's about making sure
Speaker 3: that there's the proper disclosures, it's about implementing we still
Speaker 3: have some significant things we just implemented this big transition
Speaker 3: to having the clearance the settlement cycle to one day.
Speaker 3: But we're also working on the implementation of our treasury
Speaker 3: clearing rules. And our twenty seven trillion dollar treasury market is.
Speaker 4: Way too jitterate.
Speaker 3: It has fragility and jitters in at every couple of years,
Speaker 3: and settling that down and sort of implementing that.
Speaker 4: Set of rules.
Speaker 3: But yes, there are still some rules that we proposed
Speaker 3: and we have not yet adopted that we're working on.
Speaker 3: But we're not doing it against a clock. We are
Speaker 3: basically trying to promote these markets, enhance these markets on
Speaker 3: behalf of the American public. And if I've honored to
Speaker 3: serve through my term, which is through twenty six, great,
Speaker 3: If it's earlier, that's democracy, democracy and action, and I
Speaker 3: deeply believe in it. But we're going to do everything
Speaker 3: we can for the American public.
Speaker 2: I guess what you're insinuating there is that if we
Speaker 2: were to see a Trump two point zero, you likely
Speaker 2: would potentially be out of a job, election or not.
Speaker 2: Timelines are not what is your number one priority at
Speaker 2: this moment.
Speaker 3: It's my number one prior already is the American public.
Speaker 3: That's the client and and so that's who we represent.
Speaker 3: It's of course implementing some of the rules that we've
Speaker 3: already adopted. It's considering the public feedback on the rules
Speaker 3: we propose and not adopted. But not against a clock.
Speaker 3: It's your clock. It's like it's just it's, well, you
Speaker 3: kind of run the field as well as you can
Speaker 3: run the field, and when the ref costs the clock,
Speaker 3: you see where you are. Just with all respect, and
Speaker 3: of course it's also been a cop on the beat.
Speaker 3: You know, half of our agency is examination enforcement. Another
Speaker 3: ten or fifteen percent of our workforce reviews all these
Speaker 3: disclosure filings and gives feedback to the issuing public.
Speaker 4: And it's doing that well.
Speaker 2: SEC Chairman Gary Ginsler, thank you so much for your time.
Speaker 4: Thanks a. I'm the Rage