Gary Gensler is Chair of the U.S. Securities and Exchange Commission. This post is based on his recent public statement. The views expressed in this post are those of Chair Gensler, and do not necessarily reflect those of the Securities and Exchange Commission or the Staff.
Thank you. It is good to be back with SEC Speaks.
I’d like to thank the Practising Law Institute for working with our agency on this program, and my colleagues Gurbir Grewal and William Birdthistle for co-chairing this event. As is customary, I’d like to note my views are my own, and I’m not speaking on behalf of the Commission or SEC staff.
Joseph Kennedy, the first Chairman of the SEC, had a saying: “No honest business need fear the SEC.” [1]
In the depths of the Great Depression, Congress and President Franklin Delano Roosevelt (known for a slightly more famous quotation about “fear”) enacted the first federal securities laws.
The Securities Act of 1933 was about companies raising money from the public. Investors could decide which risks to take; companies that issued securities to the public were required to provide full, fair, and truthful disclosures to the public. FDR called this law the “Truth in Securities Act.”
Congress knew, however, that their job wasn’t done. The following year, they passed the Securities Exchange Act of 1934. That statute covered intermediaries, such as the exchanges themselves and the broker-dealers. The basic idea was that the public deserves disclosure and protections not only when a security is initially issued, but also on an ongoing basis when the security is traded in the secondary markets.
Congress knew the job still wasn’t done. They understood that, when advisers manage someone else’s money, there may be additional opportunities for conflicts of interest between those advisers and clients. Thus, six years later, Congress said funds and advisers had to register, under the Investment Company Act and Investment Advisers Act of 1940.
