Trillions of dollars in assets need more sunlight and may require tighter rules, a problem highlighted by this year’s disruptions in financial markets, Securities and Exchange Commission Chair Gary Gensler said Wednesday.
Gensler, speaking in a Bloomberg Television interview, said he’s directed the agency’s staff to review how to toughen a slew of regulations that touch everything from meme stocks to blank-check companies. He made clear that the SEC could also do more to keep tabs on large asset managers -- an issue underscored by the March collapse of Archegos Capital Management.
“Investors want to know there’s somebody looking after them,” Gensler said. “I’ve asked staff to think across our whole market.”
In particular, Gensler said the SEC is examining disclosure requirements for equity-based swaps. Such derivatives were at the center of Archegos’s implosion, as Bill Hwang’s family office had bet billions of dollars on stocks without disclosing his positions to other traders.
Gensler said the agency may need to tweak rules so that people are aware when firms build large stakes. Gensler also signaled he’s concerned that family offices face laxer rules than other fund managers, as the firms avoid many disclosure requirements because they don’t accept money from outside investors.
Under Gensler, the SEC is wrestling with a deluge of retail trading in special purpose acquisition companies and meme shares like GameStop Corp. that has reshaped the stock market. The SEC chief said he wants to make sure that mom-and-pop investors don’t lose out to larger, more sophisticated players especially when they are putting their money in SPACs.
“It’s really making sure that the sponsor who is behind that is fully disclosing their take on it,” he said. “These are very expensive dilutive products.”
Gensler also said he wants the SEC to review how quickly firms must share large stakes in publicly traded companies.
This article was provided by Bloomberg News.