Friday Letter: Why the new SEC chairman is worth knowing

With Gary Gensler approved as the next SEC chairman, it's likely the venture community and other private funds will soon hear more talk about regulating SPACs, private fund secrecy and diversity investing.

If you don’t know who was just confirmed as the next chairman of the Securities and Exchange Commission, then you’re not paying attention. And you should.

In a 53-45 vote, the US Senate approved president Biden’s pick of Gary Gensler as the next SEC chairman. The 63-year-old is a former investment banker with Goldman Sachs, and during the Obama administration, he served as chairman of the Commodity Futures Trading Commission in the immediate wake of the Great Financial Crisis. During that time, he advocated for reform.

He’s likely to do the same as head of the SEC, which now has the Democratic majority. Bill Myers, a reporter at our affiliate publication Regulatory Compliance Watch, noted that the new realigned SEC under the Biden administration is certain to take on private funds secrecy, sustainable investing and other issues. This includes regulation of SPACs.

The agency is also currently holding events to discuss diversity investing, another topical issue in the venture community.

Given Gensler’s inclinations, RCW recently reported that experts are urging private funds to get ahead of the expected actions and start bulking up their compliance teams.

I spoke with a Silicon Valley VC this week who has lived in this area as long as me and remembers the dot-com heyday when companies went public without solid financials. In terms of SPAC regulation, this VC noted that SPACs are here to stay and that if they’re not regulated, “people will blow them up, which is a shame because they make sense as a liquidity option for a ton of companies. So it will be interesting to see how hard the new SEC comes down on SPAC regulation.”

As we reported last week, the SEC was already addressing the SPAC craze prior to the Senate approval of the new chairman. Regulators are already issuing new statements detailing requirements and restrictions for participants in them.

Bottom line, Gensler is a name the venture community will likely hear more often.

Tell me what you think. Are you concerned about a strict regulatory environment from the SEC, or is oversight welcome? Either way, let me know. You can drop me a note at agoldfisher@buyoutsinsider.com.