Defining 'Best Interest' Will Be a Priority for Gensler's SEC

“What I think is critical for the chairman of the SEC is laser-like focus on investor interest,” Levitt added.

William Galvin, Massachusetts’ top securities regulator, added Tuesday in an email to ThinkAdvisor that he was “very excited” about Gensler’s appointment. “Based on Mr. Gensler’s previous work, I believe that he will restore the SEC to its traditional role as the investors’ advocate. The first item on the agenda should be to amend the SEC’s so-called Regulation Best Interest to reflect a fiduciary standard.”

The first enforcement action under the Massachusetts fiduciary rule came in a recent complaint filed against Robinhood.

Greg Valliere, chief U.S. strategist for AGF Investments, said in his Tuesday morning email briefing that Biden’s choosing of Gensler and Chopra signals that “friction looms with Wall Street.” Gensler’s and Chopra’s nominations “pleased progressives — and signaled that Wall Street will be aggressively regulated.”

Gensler received the Frankel Fiduciary Prize in 2014.

When it comes to reworking Reg BI, “there’s a lot that can be accomplished by adopting a strong, principles-based definition of best interest, making clear that conflict mitigation needs to be designed to prevent the conflict from tainting the recommendation, and then enforcing those standards,” Roper said. “That can be done relatively quickly. Any changes beyond that are likely to be based on evidence of how firms are implementing the new standard and where those efforts are falling short.”

As to the SEC’s customer relationship summary, or Form CRS, “I expect future changes based on the results of investor testing,” Roper added.

Lisa Hopkins, president of the North American Securities Administrators Association and West Virginia senior deputy securities commissioner, agreed in a Tuesday statement that Gensler’s being named to lead the SEC “signals that the Biden administration expects the agency to hold those who harm investors accountable for their wrongdoing and to pursue a regulatory agenda that prioritizes investor protection and is supported by vigorous examination and enforcement efforts.”

Patrick McHenry, R-N.C., ranking member of the House Financial Services Committee, applauded Gensler’s fintech prowess. “Gary’s acceptance of financial technology and cryptocurrency is a welcome change from many Democrats who avoid innovation just because they don’t understand it,” McHenry said in a statement. “I will continue to encourage the SEC to provide regulatory clarity to enhance collaboration to keep pace with the evolving nature of digital assets and, if Mr. Gensler is confirmed by the Senate, I am willing to work with him towards that end.”