The new chair of the Securities and Exchange Commission is taking a very different approach compared to his predecessor. That’s what I learned from a senior SEC official during my visit to the Milken Institute Global Conference, which is quite the hub for journalists interested in the key figures in Wall Street and Washington.
Paul Atkins, recently appointed by Trump, has a crucial role focused on safeguarding small investors and ensuring market efficiency.
Critics argue he was selected by President Biden to succeed Gary Gensler, who took the agency in a direction that many felt strayed from its original legislative principles.
According to my source at the SEC, “We’re going to do the opposite of everything Gary did. More details will emerge soon.”
In contrast to Gensler, who had a background in trading and academia, Atkins has experience as a securities lawyer and was once a member of the SEC during George W. Bush’s presidency.
He seems to grasp the priorities and limitations of the role. So, expect less ambition in pursuing broad initiatives like Gensler’s focus on requiring disclosures related to carbon emissions, which don’t really align with what most investors typically care about.
The aggressive enforcement seen under Gensler, particularly aimed at companies like those in the crypto space, may be a thing of the past, as some believe those initiatives were overly critical of businesses that challenge government oversight.
Gensler’s attempts to modify stock market structures, presumed to benefit small investors, could also fade—especially since trading has become mostly commission-free.
Atkins isn’t concerned about brokerages like Robinhood selling “order flows” or matching transactions with other firms. He seems to think the system functions effectively, despite a few hiccups.
What initiatives might Atkins pursue? There’s chatter about implementing more detailed regulations on cryptocurrencies. Atkins apparently thinks that the Commodity Futures Trading Commission is already doing a good job overseeing aspects of the digital currency landscape, which differs from traditional investment like stocks and bonds.
During Trump’s first term, proxy advisory firms faced scrutiny under then-SEC Chairman Jay Clayton, and it’s likely similar rules may come back under Atkins. These firms play a significant role in guiding investors on shareholder votes, a topic that raises concerns about their potential biases.
Atkins appears to believe that the process of becoming a public company is overly complex, contributing to a decline in public listings. This reduction, nearly halved since 1996, points to deeper issues in capital formation compared to Gensler’s focus on market structure.
There’s so much to unpack here, but it’s clear that the SEC is on an entirely new trajectory.
“It’s a new day at the SEC,” an Atkins spokesperson stated, reflecting a commitment to the original mission set by Congress: protecting investors, providing fairness, ensuring orderly markets, and promoting capital formation.
