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US Securities and Exchange Commission

Senate Panel Advances Gensler Nomination for SEC Chair

Bill Flook  Editor, Accounting and Compliance Alert

· 5 minute read

Bill Flook  Editor, Accounting and Compliance Alert

· 5 minute read

The Senate Banking Committee on March 10, 2021, voted 14 to 10 to advance the nomination of Gary Gensler for SEC chairman to the full Senate. The vote clears a key hurdle for Gensler, who has the support of both financial reform activists and the business lobby to head up the market regulator.

Chairman Sherrod Brown, an Ohio Democrat, said Gensler’s leadership of the commission “is critical to ensuring the agency meets the evolving needs of the people whose hard-earned savings are invested in the markets.”

In a break with the U.S. Chamber of Commerce, Banking Committee Republicans, led by Ranking Member Pat Toomey of Pennsylvania, broadly opposed advancing Gensler’s nomination. Nothing Gensler said during his March 2 confirmation hearing “has alleviated my concerns about him,” Toomey said.

“There is no doubt that Mr. Gensler knows a lot about the securities markets, but based on his record I’m concerned that he will stray from the SEC’s tradition of bipartisanship by using the agency’s regulatory powers to advance a liberal social agenda on issues such as climate change, political spending, and racial inequality,” Toomey said, adding that securities laws “are not the appropriate vehicle to address these social and cultural issues.”

If confirmed, Gensler would serve one truncated term running through June 5, and another five-year term after that.

Gensler is widely expected to lead the commission toward a more robust public company disclosure regime on environmental, social, and governance (ESG) topics, including corporate political spending and climate risk, two areas he marked for potential rulemakings during the hearing. Democratic lawmakers are working to remove a budget provision barring the SEC from making rules requiring public companies to disclose their political spending, and have separately introduced bills that would mandate those disclosures. (See At Senate Hearing, SEC Nominee Gensler Signals Support for Climate Risk, Political Spending Disclosure Rules in the March 3, 2021, edition of Accounting & Compliance Alert.)

Gensler, during the same hearing, said any actions he took would be rooted in the principles of materiality, a point that resonates with industry groups who want the SEC to avoid putting in place new prescriptive disclosure requirements.

In a March 8 letter endorsing Gensler, the U.S. Chamber of Commerce wrote that Gensler, during the confirmation hearing, “demonstrated a strong understanding of ‘materiality’ for disclosure of information in public company disclosures through multiple references” to the 1976 Supreme Court ruling in TSC Industries, Inc. v. Northway, Inc.. In that ruling, the Supreme Court set out a test for whether an omitted fact is material based on “if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.”

“Mr. Gensler has the credentials to uphold the SEC’s tripartite mission of investor protection, fair and efficient capital markets, and capital formation,” the Chamber wrote in the letter. “His experience will be critical to ensuring businesses, especially small and emerging growth companies, are able to access needed capital so that they can grow and help enable a robust economic recovery.”

The business lobby added that it has a history of working constructively with the incoming SEC chairman, including on areas where they disagree, and expects “he will be a balanced leader of the SEC and strong supporter of competitive capital markets.”

Gensler is former chair of the Commodity Futures Trading Commission (CFTC), before which he served in senior positions at the Treasury Department and as a partner at Goldman Sachs.


This article originally appeared in the March 11, 2021 edition of Accounting & Compliance Alert, available on Checkpoint.

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