The SEC’s election year urgency

As this is an election year, the current SEC administration wants to push through as much of its remaining agenda as it can. SEC Chairman Gary Gensler seems very determined to leave his legacy as the tough cop on the beat who enacted meaningful regulatory changes to protect investors – and, in his view, necessitated by the evolving financial markets. But there’s a lot for the SEC to do in the months before the general election, and it remains to be seen how quickly it can and will move toward completing its agenda.

Most likely, the SEC will put its greatest efforts into a few high-priority areas, looking to bolster its key statistics compared to 2023. These would include exceeding its prior-year examination numbers, increasing Enforcement actions and fine amounts, and reviewing firms’ compliance with the more recently adopted and effective rules. The SEC will rely heavily on its tools of exams and enforcement to justify its aggressive rulemaking that has occurred over the past few years. There will be a continued focus on firms’ compliance with the Marketing Rule, as well as stepped-up oversight and increased transparency of private fund managers via new rules passed in 2023. The latter rules were necessary, according to the SEC, due to the significance and influence private funds now have in the markets. And let’s not forget the numerous rules currently at the proposal stage waiting for final approval by commissioners holding a Democrat majority. There’s urgency there too, as this SEC Chairman would not want to see that advantage slip away due to the election.

Seeking to slow the regulator, there will be legal challenges to SEC rules, Congressional hearings and perhaps a government shutdown on the horizon. But the pattern demonstrated to date by this SEC and its Chairman would seem to indicate full steam ahead in 2024 – until at least the election day results stop or restart the SEC’s mandate.