By Bill Alpert

The chair of the U.S. Securities and Exchange Commission Gary Gensler announced that he will resign -- but not until the day of Donald Trump's inauguration as president.

In a Thursday afternoon release, Gensler said he would step down at noon on Jan. 20, 2025.

"The Securities and Exchange Commission is a remarkable agency," Gensler said. "It has been an honor of a lifetime to serve with them on behalf of everyday Americans and ensure that our capital markets remain the best in the world."

Gensler and his Democrat majority on the commission undertook an ambitious program to level playing fields they felt were tilted in favor of Wall Street insiders. Trump has promised an SEC that will be more friendly to the industry. Later Thursday afternoon, Fox Business Network, citing people knowledgeable on the matter, reported that Trump will tap the former SEC commissioner Paul Atkins as Gensler's replacement.

Previous chairs have left earlier in the period before a new administration assumes office. But Gensler isn't alone in his determination to stay until the last minute. Across the Biden administration's agencies, appointees and high-ranking bureaucrats are working overtime to turn their agendas into fait accompli before the Trump administration arrives. Federal agencies typically have their eyes on the clock during election years.

Gensler's release listed the SEC's accomplishments since he took charge in April 2017. Trade settlement was speeded up for stocks and U.S. Treasuries. So were disclosures by those seeking control of a company. The commission filed more than 2,700 enforcement actions and collected some $21 billion in penalties and disgorgement orders, with $2.7 billion of that amount returned to harmed investors.

A long-running conflict involving the agency was its enforcement of securities laws against cryptocurrency operators, a practice dating back to the tenure of SEC chair Jay Clayton under the first Trump administration. Gensler continued to pursue crypto intermediaries in actions alleging fraud, failure to register, and other misconduct. The crypto industry, and the SEC's Republican commissioners, insisted that cryptocurrencies weren't securities and merited brand new regulations.

Gensler's departure announcement continued the crypto debate, pointing out that many courts had agreed that securities law applies to crypto. In the fiscal year ended September 2024, 18% of complaints received by the SEC were crypto-related, even though crypto markets are less than 1% of U.S. capital markets.

President-elect Trump says he'll side with the crypto industry. Bitcoin prices soared after his election.

A number of the rules listed among Gensler's accomplishments have been halted in the courts. Just Thursday morning, for example, a federal district judge in Texas vacated a nine-month-old rule that required some hedge funds to register as broker-dealers in U.S. Treasuries.

A 2023 rule expanded the disclosures required of hedge funds and private-equity managers, while forbidding preferential treatment for their biggest investors. Pension fund groups applauded the rule. Hedge funds hated it. A New Orleans federal judge blocked it in June.

The battles over specific rules were part of a wider war by conservatives and business groups to disarm federal agencies. This year, the U.S. Supreme Court barred the SEC from bringing certain enforcement actions in the agency's administrative court. The Court also ended its deference to an agency's interpretation of federal statutes.

A package of rules proposed in late 2022 would have restructured how stocks are traded: hampering payments by market makers -- like Virtu Financial and Citadel Securities -- to retail brokers who sent them order flow; shifting retail orders from those market makers to stock exchanges; and holding brokers to quality standards in their execution of a customer's trades.

In the face of loud opposition by the trading establishment, only a few of the equity market structure reforms were adopted. Starting next year, brokers must show whether they're getting good prices for their customers' trades. Another rule narrowed the step by which stock prices move, from a penny to half-a-penny, while reducing some trading fees charged by exchanges. That rule has been challenged in court.

One of the broadest changes affected under Gensler was a March 2024 rule requiring that public companies disclose the climate risks that their businesses faced -- in line with regulations in Europe and in states like California. That, too, is being challenged in court.

Write to Bill Alpert at william.alpert@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 21, 2024 15:45 ET (20:45 GMT)

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