In remarks at an open meeting of the SEC this week (focused on proposals related to cybersecurity and data protection in the markets), SEC Chair Gary Gensler’s opening remarks addressed the bank failures of last week in the context of enforcement and market stability.
First, with regard to enforcement, he reiterated his theme expressed over the weekend: that the SEC staff “is particularly focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.” (See this PubCo post.)
Second, with respect to market stability, he emphasized his view that “the SEC has a responsibility to help protect for financial stability.” He observed that, historically, there have been many instances “when tremors starting at one financial institution or corner of the financial system spill out to the broader economy. When this happens, the American public—bystanders to the highways of finance—inevitably gets hurt.” Here, he alluded to the eight million American jobs—and millions of homes and small businesses—that were lost as a result of the 2008 financial crisis. With that in mind, to fulfill its responsibility to help protect financial stability, the SEC was focused on projects designed to enhance market resiliency, such as the current proposals related to “cyber resiliency and updating our rules for systems compliance and integrity of some of the financial system’s key entities.” In conclusion, he observed that the “events of the last week are a reminder of the importance of these resiliency projects for everyday Americans. Unfortunately, history tells us that events like those of this past week will occur from time to time. Thus, we should do our best to make them less frequent, strengthen the guardrails of finance for when they do occur, and protect the American public.”