Cue the World’s Smallest Violin
It appears that SEC Chairman Gary Gensler is giving Wall Street a sad because he wants them to stop defrauding the rest of us.
Boo f%$#ing hoo:
Wall Street’s top regulator is pursuing the biggest overhaul of the $51 trillion U.S. stock market in two decades. First he’ll have to fend off a major industry resistance campaign.
Securities and Exchange Commission Chair Gary Gensler — a former Goldman Sachs partner turned progressive icon — is set to launch a regulatory broadside in the coming weeks against brokerage and trading giants including Charles Schwab, Robinhood and GOP megadonor Ken Griffin’s Citadel Securities, according to interviews with more than a dozen executives, lawmakers, regulators and investor advocates.
So, this sounds like regulations against payment for order flow, which is basically front-running (illegal) re-labeled.
Interesting fact: This was invented by Bernie Madoff, yes, THAT Bernie Madoff.
The rules that Gensler is spearheading would revamp the stock market’s plumbing, partly in response to the 2021 meme stock saga in which Robinhood and other brokerages attracted scrutiny after they were overwhelmed by trading in shares of companies such as GameStop and AMC. Gensler, who has held leading regulatory roles in the Biden and Obama administrations, has questioned whether investors are operating in an environment that is “as fair and competitive as possible.” He is expected to crack down on the complex web of payments and fees that exchanges, brokerages and trading firms share when processing investors’ stock trades.
While the proposals have yet to be released, industry executives have already begun talking about suing the SEC over the plans. And a growing number of Hill Democrats are urging Gensler to proceed with caution, signaling a potentially treacherous political road ahead even among members of his own party — one that will become even more fraught if Republican critics gain a majority in Congress.
“We have to be careful not to throw the baby out with the bathwater,” Rep. Ritchie Torres, a New York Democrat on the House Financial Services Committee, said in an interview.
Torres gets the largest proportion of his campaign money from finance, with real-estate, which is hand in hand with finance, particularly in New York, a close second.
At issue for Gensler is ultimately a series of long-held concerns from investor advocates and progressives that the current market is not built for everyday people and institutional investors such as pension funds — but rather for Wall Street intermediaries.
The SEC chief has talked about half a dozen possible reforms. Among them are changes to the way stock trades are priced on exchanges like NYSE and Nasdaq, which Gensler has said are not on a level playing field with other trading venues that operate with more regulatory flexibility and less transparency. Only about half of all trading in the market today occurs on stock exchanges, with the rest taking place through banks and brokerages running private markets and handling the trades themselves. Gensler has also discussed more disclosures around how brokers execute clients’ orders, changes to what constitutes the best price in the market and ways to move more trading to public exchanges.
The question is whether the Gensler-led SEC will be able to enact the proposals in the face of widespread backlash.
Bank robbers hat vault doors and armed guards, and the, “Widespread Backlash,” here is a few thousand people who get rich cheating the rest of us.
Some of the firms that have the most to lose — the wholesalers and brokerages responsible for how and where individual investors’ trades occur — have already started to lay the groundwork for lawsuits, including by amassing data to refute the SEC’s economic case for the changes.
Of course they are. I’m sure that they are already figuring how to get this before a judge who will swallow the sh%$ that they are peddling.
“You don’t want to do a massive restructuring of how things work without some feeling of how it’s going to work,” said Rep. Bill Foster (D-Ill.), a House Financial Services Committee member who is urging the SEC to first use a pilot program before introducing changes to the broader market.
An excuse to do nothing, from a member New Democrat Coalition, over $½ million from the finance, insurance and real estate sectors.
“The conflicts of interest that have evolved have already become very ingrained and central to intermediaries’ business models,” said Tyler Gellasch, a former SEC official who now runs the Healthy Markets Association, an investor advocacy group that has been calling for many of the changes Gensler is expected to propose. “The question will really be how far is this commission going to go to protect investors?”
I think that Gensler would go pretty far. Unfortunately the Democrats in the House and the Senate, along with other elements of the Democratic Party establishment (There is no Democratic Party establishment) will do everything that they can to stop him.