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Biden’s SEC to Zero In on Broker-Dealers, RIAs: Law Firm

By Alex Padalka January 22, 2021

The SEC during U.S. President Joe Biden's administration is likely to be a tougher regulator than it was under his predecessor — and the commission’s scrutiny of broker-dealers and RIAs in particular is likely to grow, lawyers say.

On Monday, Biden’s transition team named Gary Gensler, former head of the Commodity Futures Trading Commission, to lead the SEC. Due to his tough stance on swap trading and investment banks during his term with the CFTC, Gensler is already seen as being tough on Wall Street, if he is confirmed by the Senate.

Biden’s administration will certainly boost enforcement activity, but “we can expect a shift in focus and priorities away from retail investors and securities offering frauds and an increased emphasis on the conduct of institutional market participants — investment advisers and broker-dealers, as well as public company accounting, financial reporting and disclosure,” the law firm Gibson Dunn writes.

In 2020, the SEC’s enforcement cases were down 17%, the lowest in five years, although 492 of the 715 enforcement actions were brought after the regulator instituted mandatory telework in light of the Covid-19 pandemic, the SEC said in November.

The Wall Street Journal, meanwhile, has claimed that a Gensler-headed SEC “could give Wall Street its most aggressive regulator in two decades,” the law firm writes.

Gibson Dunn also writes that, assuming Gensler is confirmed, the regulator is likely to target digital currencies, with Gensler bringing “a strong interest in, and familiarity with, the market for crypto-currency and other digital tokens.”

Gibson Dunn believes that Biden’s administration will increase the importance of compliance and financial reporting at RIAs, broker-dealers and public companies, the lawyers write.

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