Are prevailing winds once again to blow from the SEC?
- Gary Gensler, as expected, was sworn in last month as the new Chair of the Securities and Exchanges Commission (SEC). The arrival of the ex-CFTC chair and former Goldman Sachs banker is a big appointment to watch in the new US administration. Gensler had previously served in both the Obama and Clinton administrations and knows President Biden well.
- A newly in-post Gensler had a shock repair to mend following the resignation, after only five days in the job, of his newly appointed Director of the Division of Enforcement, Alex Oh. This is said to be because of a potential conflict of interest from her earlier private practice work defending Exxon Mobile. Melissa Hodgman returns as Acting Enforcement Director.
- SEC team sheet changes aside, Gensler will have quite an in-box with a myriad of priorities including ESG, reporting, crypto-assets, the COVID-19 enforcement agenda, diversity and the recent fall-out from GamesStop and Archegos. Many are expecting Gensler to toughen-up oversight on Wall Street to further protect investors. By extension and looking to this side of the pond, European banks will certainly be kept on their regulatory toes by Gensler’s appointment and ensuring that all is in order on both sides of the Atlantic.
- With much attention directed towards the seismic global events of late, European bank CEOs should be casting an eye back to the Department of Justice (DOJ) compliance and AML fines levied against European banks following the crash of 2007/2008. The likes of BNP Paribas, Barclays, RBS, UBS, HSBC and ING, all fell foul of US regulators (some at a cost of billions) over the intervening years and with regards to various compliance and AML failings. A lookback to past events and examining similar signs today as clues to future activity, would suggest that Europe’s global banking HQs will certainly be alert to the new hand on the tiller at the SEC.
- Looking ahead geo-politically, how interesting to be a fly on the wall at certain G7 Summit meetings later this year where global regulatory cooperation and priorities are mused. With new chiefs now in place at the SEC, FCA and BaFin, there should be no shortage of regulatory enthusiasm high on such meeting agendas in Cornwall.
- As European banks continue to monitor evolving upstream risks which emanate from US financial regulators, the plethora of regulatory affairs, regulatory development, regulatory change and regulatory liaison teams will be back on point. Having previously soaked-up large chunks of hard fought for compliance and AML budgets, these teams have sometimes attracted criticism for duplication of effort. As many of these regulatory teams have been either cut-back or merged during the cost-cutting of the last few years, the new administration in Washington should see them once again back in the frame across European banking hubs and scanning, what might well be, a tougher US regulatory environment blowing eastwards.