Countdown to the resignation of SEC Chairman Gensler! Reports suggest the new leader may be a partner at a law firm

Written by: Zhao Yuhe

Source: Wall Street Journal

Informed sources revealed to the media that Richard Farley, a partner at Kramer Levin Naftalis Frankel, and Norm Champ, a partner at Kirkland Ellis, are candidates to succeed Gary Gensler as the chairman of the U.S. Securities and Exchange Commission (SEC).

Additionally, media reports indicate that Robinhood's Chief Legal Officer Dan Gallagher, current SEC Commissioner Mark Uyeda, and former Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert are also among the candidates.

Other sources have told the media that former SEC Commissioners Paul Atkins and Robert Stebbins, a partner at Willkie Farr Gallagher, are also being considered. According to a previous report by Reuters, Atkins served on Trump's transition team in 2016 and was a strong contender for the SEC chairman position that year.

Two informed sources told the media that Robinhood's Chief Legal Officer Gallagher is a popular candidate among executives in the cryptocurrency industry, who have donated millions of dollars to Trump's Republican campaign. Currently, Gallagher has the highest likelihood of being appointed, but discussions are still ongoing. Trump's press secretary Karoline Leavitt stated in a press release, "President-elect Trump will soon begin deciding who will serve in his second administration. These decisions will be announced when made."

Some media outlets have reported that members of the transition team for President-elect Trump and other advisors have begun talks with potential candidates following the election on Tuesday. Discussions are still ongoing, and it may take weeks to select a candidate.

Whoever it is, regulation will be relaxed

Analysts believe that regardless of Trump's choice, the next SEC head may review the major rules established during Gensler's tenure and seek to reduce regulation in the digital currency industry to comply with securities laws.

Gensler was nominated by current President Biden in February 2021 and was sworn in two months later. Gensler's term ends in 2026, but he has stated he will resign when a new Republican administration takes office.

During his campaign, Trump promised to promote the development of cryptocurrencies and reform the SEC to attract funding from the crypto industry. However, Gensler has taken a tough stance on the industry since taking office, claiming it has ignored SEC regulations. Reuters previously reported that cryptocurrency companies have been pushing for the election of an SEC chairman who can eliminate cumbersome regulatory policies.

Many analysts believe that Republican SEC Commissioner and cryptocurrency supporter Hester Peirce is a strong candidate for SEC chairman, but sources have revealed to the media that she has told some people she does not want the position.

Although Trump has made few comments on financial policy this time, he has repeatedly promised to cut "heavy" regulations. Bankers and lobbyists expect the Trump administration to repeal or significantly weaken the Basel Accord, which requires large banks to increase their capital adequacy ratios, as well as reduce restrictions on mergers and acquisitions.

FDIC and Federal Reserve will also be restructured

Additionally, Trump could remove Acting Comptroller of the Currency Michael Hsu from his position on his first day in office, but restructuring the top regulatory positions at the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) may take months.

Among the candidates being considered by Trump's team for senior banking regulatory positions is Federal Reserve Governor Michelle Bowman. She has criticized the capital adequacy increases led by Vice Chair Michael Barr, who is responsible for regulation, and has advocated for loosening bank rules and regulations. Informed sources have indicated that Barr has expressed his intention to serve out his term as vice chair until 2026, and it is unclear whether Trump will attempt to remove Barr early.

Informed sources also revealed to the media that Travis Hill, the Republican vice chair of the FDIC board and a former lawyer for the Senate Banking Committee, is also on the list of candidates for senior banking regulatory positions. Hill has also opposed the Basel rules. Additionally, Jonathan Gould, a partner at Jones Day law firm who served as the Senior Deputy Comptroller and Chief Counsel from 2018 to 2021, is also being considered.