Page 41 - Investment Advisor - November 2021
P. 41
THE PLAYING FIELD
By Melanie Waddell
SEC Is Stretched Thin, Especially With
Advisory Growth
SEC chief Gensler also testifies crypto needs regulation because right
now it’s the “Wild West.”
ecurities and Exchange Commission the regulatory framework for digital
Chairman Gary Gensler told House assets embraces new technology and
Slawmakers in early October that innovation by providing a “safe harbor”
while the agency completed more than for startup digital asset projects, while
3,000 exams of firms it oversees in 2020, maintaining investor protections.
exceeding the previous year’s numbers, McHenry told Gensler that he has
the agency staff has shrunk “about 4% to “strong concerns” about how Gensler’s
5%” over the past five years. SEC will regulate in the digital assets space,
“As our capital markets have grown and and “whether the law is on your side.”
technology continues to shape the face of “It’s time for Congress to step up and
finance, though, the SEC has not grown to provide clear guidelines that will not
meet the needs of the 2020s,” Gensler told allow an SEC chair to change the law by
members of the House Financial Services interview or statement or a statement
Committee during an oversight hearing. posted on the Commission’s website,”
At the end of fiscal year 2016, the SEC McHenry said. “We need to nurture
SEC Chairman Gary had 4,650 people on board, Gensler tes- innovation and technology in this coun-
Gensler told House tified. Nearly five years later, that num- try, not send it overseas.”
McHenry said his bill, which borrows
lawmakers that while ber had decreased by about 4%. from work done by Republican SEC
Since 2016, Gensler continued, “the
the agency completed Division of Examinations’ total staff has Commissioner Hester Peirce, “helps
more than 3,000 exams remained relatively flat despite growth bring legal certainty to digital asset proj-
ects that we badly need regulatory clar-
of more than 20% in the population of
of firms it oversees in registered investment advisors and a ity to launch.”
2020, exceeding the 65% increase in the assets managed by Gensler told the committee: “We just
previous year’s numbers, these firms. Other divisions are similarly don’t have enough investor protection in
stretched thin.”
crypto finance, issuance, trading or lend-
the agency staff has The House’s support of a fiscal year ing. Frankly, at this time, it’s more like
shrunk “about 4% to 5%” 2022 budget of about $2 billion for the the Wild West or the old world of ‘buyer
beware’ that existed before the securi-
SEC, Gensler said, would get the securi-
over the past five years. ties regulator back to “only a headcount ties laws were enacted. This asset class
of 4,859.” is rife with fraud, scams and abuse in
As of September, the agency is work- certain applications. We can do better.”
ing under a voluntary return to the He said SEC staffers are working
office, Gensler stated. with other financial regulators to pro-
tect investors under current authorities
NEW CRYPTO BILL and to identify gaps that, with Congress’
Rep. Patrick McHenry, R-N.C., ranking assistance, can be filled.
member on the committee, introduced In both of these areas, Gensler stated,
the same day the Clarity for Digital the SEC has initiated “projects” on:
Tokens Act, which he said ensures that • The offer and sale of crypto tokens;
NOVEMBER 2021 INVESTMENT ADVISOR 39
