Oct 24, 2022 - Economy

Red wave may drown SEC rulemaking

Gary Gensler has chaired the SEC for 18 months. Or as it may soon be known in the Gensler household, his halcyon days.

The big picture: Gensler will be in the crosshairs if Republicans take control of Congress next month, which is looking increasingly likely.

Scrutiny would mostly focus on substance, particularly transparency requirements around the first two parts of ESG.
But it also would dig into process, based on bipartisan complaints that public notice and comment windows have been too short.

Why it matters: SEC rulemaking could be significantly slowed, or even ground to a halt.

That could mean a delay, or even scrapping, heavily lobbied regulations that would mandate detailed disclosures of carbon emissions.
Same for several new private fund reporting rules, including increased disclosure of fund manager compensation, quarterly reporting to limited partners, and notifying the SEC one business day after discrete events like advisor-led secondaries or clawbacks.

The bottom line: Divided federal government could cause D.C. gridlock that goes far beyond legislation.