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