The Biden Administration continues to announce new appointments as it looks to fill out the bench of federal appointees following the inauguration on January 20, 2020. For the securities and financial services industry, many questions exist as to how this leadership transaction will impact policy. In general, the Trump administration has been fairly supportive of innovation and financial services firms. So what’s in store in the coming weeks?
Crowdfund Insider recently received some perspective from Stacie Hartman partner and co-chair of Steptoe’s Financial Services Group and a top lawyer in the derivatives bar who regularly handles SEC and CFTC enforcement actions. President-elect Joe Biden’s addition of former Commodity Futures Trading Commission (CFTC) chairman Gary Gensler has been added to the transition team. This could mean tougher trading rules and more enforcement actions on Wall Street. According to Hartman, she believes that the CFTC will continue much as it has due to two things:
(1) the overhang of investigations that have started under the Trump administration that will continue under Biden with staff that remains.
(2) continued focus on high profile enforcement actions and the big-ticket items with incoming regime operating with existing career staff.
Hartman had this to say:
“It is typically assumed that enforcement would be more aggressive in a Democratic than in a Republican administration, and that’s often true. However, the current CFTC has been very aggressive in its enforcement, setting records for numbers of cases and fines. It may be difficult for a new Commission to exceed it.”
Hartman believes there will be a continuation of aggressive enforcement, possibly more regulation, and perhaps differences in the types of cases brought. But there may be more focus on customer-related issues and less on pushing boundaries for high-profile cases.
“Increased innovation in financial services may be hampered by increased regulation,” said Hartman. “Regulators are still wrestling with promoting positive innovations such as in the digital asset space while ferreting out and stopping bad actors. There may be a greater tendency to increase regulation in an effort to prevent the latter, but the danger is that it may end up constraining the former.”
Cross your fingers that policy will support beneficial Fintech innovation and leadership will not defer to excessive regulation that stifles innovation. We will know more soon enough.