As the nation focuses on the results of today's U.S. presidential election, the future leadership of the Securities and Exchange Commission (SEC) remains uncertain. Since 2021, the SEC, under Chairman Gary Gensler's leadership, has faced both praise and criticism for its recent policy direction. A new presidential administration, whether led by Donald Trump or Kamala Harris, could bring significant changes to the SEC's top leadership.
If former President Donald Trump returns to office, he may seek to replace or demote Gensler, possibly appointing another SEC commissioner, such as Hester Peirce or Mark Uyeda, as acting chairman. On the other hand, if Vice President Kamala Harris takes office, her stance on Gensler remains uncertain. While some have pressured Harris to remove Gensler, her administration may also choose to retain him, especially if the Republican-controlled Senate resists potential nominees.
Can the president remove the SEC chairman?
Removing the SEC chairman is not as simple as it seems. A Supreme Court case from 1935 (Humphrey's Executor) established a precedent that limits the president's power to dismiss commissioners of independent agencies like the SEC without cause.
This ruling applies to the Federal Trade Commission (FTC), but subsequently affected the treatment of the SEC and other similar regulatory bodies. Therefore, any president, whether Trump or Harris, attempting to directly dismiss Gensler could face legal challenges.
Although this case did not specifically target the SEC, it supports the idea of independence for similar regulatory commissions. This means that even if the new president wants to remove Gensler from the chairmanship, Gensler could continue serving as an SEC commissioner until 2026, maintaining a degree of influence over decision-making until a successor is determined. This situation highlights the potential complexities in the transition of SEC leadership.
What each candidate's victory means for the SEC
If Trump wins, he may take steps to demote Gensler and potentially appoint commissioner Hester Peirce or Mark Uyeda as acting chairman. The Trump administration may view this as a quick way to shift the SEC's focus to align more closely with Republican values. However, Gensler can choose to remain a commissioner until 2026, maintaining some influence over the SEC's decision-making.
If Harris wins, her attitude toward Gensler's leadership remains difficult to predict. While there are calls for Gensler's replacement, she has not clarified her views on his performance. If the Republican-controlled Senate blocks any new SEC chairman nominees, Harris may retain Gensler to avoid immediate friction with Congress. This move could delay changes in SEC policy, allowing Gensler to continue shaping the agency's direction.
