SEC chair to defend rulemaking, enforcement record before Congress

By Chris Prentice and John McCrank

NEW YORK (Reuters) – The head of the U.S. Securities and Exchange Commission (SEC) plans to defend its rulemaking and policing of market misconduct at a Tuesday hearing led by Republican lawmakers who have accused it of overstepping its authority.

Having won control of the House of Representatives last year, Republicans now have a pulpit to try to constrain President Joe Biden’s administrative oversight of key financial issues. Some in the finance industry have joined in the criticism, saying the SEC is going too far in its reforms and not taking time for industry feedback.

But SEC Chair Gary Gensler, who has helmed the agency since April 2021, underscored the agency’s rulemaking work as “grounded in legal authorities granted by Congress” in testimony prepared for Tuesday’s House Financial Services Committee hearing.

The SEC has proposed a stock market overhaul and laid out plans to require companies to disclose climate-related risks, among numerous other reforms.

“Forsaking investor protection puts real people’s life savings at risk. The goal is to protect our ‘clients’: U.S. investors,” he said in the prepared remarks.

But the U.S. Chamber of Commerce, which represents businesses, in a letter last week said the agency’s rulemaking under Gensler is “torrential, disjointed and rushed.”

Republican SEC Commissioner Hester Peirce has also criticized the agency’s agenda and engagement with industry.

“Today’s Commission treats the notice-and-comment rulemaking process not as a conversation, but as a threat,” she said at a public meeting to discuss a proposed reform that could usher in major change for cryptocurrency firms.

The SEC has also actively policed market misconduct, levying record penalties in the last fiscal year.

Progressive lawmakers and investor advocates have praised the SEC and pushed for Congress to give the agency more resources.

The “SEC is making significant progress in its mission to protect investors and maintain fair, orderly, and efficient markets,” Stephen Hall, legal director and securities specialist at Better Markets, said in a statement.

(Reporting by Chris Prentice; Editing by Aurora Ellis)