Traxler said she expects to see “a continued pro-regulatory environment with aggressive enforcement. The DOL will continue to pursue its new independent contractor rule, which is a major issue for our members. We also expect DOL to release a new fiduciary standard for investment advice which is likely to seek to achieve similar goals as its 2016 proposal.
“The SEC will continue its focus on conflicts of interest and Regulation Best Interest enforcement, particularly related to digital engagement practices and gamification,” Traxler said.
Regardless of whether Republicans or Democrats have control of Congress, “there is bipartisan interest in pursuing legislation on cryptocurrency regulation, insider trading and big tech concerns,” she added.
Duane Thompson, president of Potomac Strategies, a legislative and media relations consulting firm specializing financial services issues, said he would expect a GOP Congress to put the spotlight on Gensler and Lisa Gomez, assistant secretary of labor for employee benefits security at the U.S. Department of Labor. But he said that with a Democratic administration, the power of GOP legislators will be limited.
The House and Senate financial services committees "are very likely to invite or subpoena Gary Gensler or Lisa Gomez in and grill them over their proposals and agenda. But what can they do beside that?” he said.
While Congressional leaders can add legislative riders to appropriation bills to prohibit the SEC and DOL from using funding and staff appropriations to enforce particular rules, these types of riders usually get taken out before final passage of bills, Thompson said. “But I wouldn’t rule it out even if it is a long shot,” added Thompson, a former government relations director of the Financial Planning Association.
North Carolina’s Rep. Patrick McHenry, the top ranking GOP members of the House Financial Services Committee, is widely viewed as the committee's next chairman, and Sen. Tim Scott of South Carolina is seen as the leading contender to take over the Senate Committee on Banking, Housing and Urban Affairs, “although there is some speculation that he may want to run for president, which would direct his attention elsewhere,” Gardner predicted.
“A Republican win in the Senate could slow the Biden administration’s regulatory policy, but probably not as much as some investors think," Gardner added. "The theory is that a Republican Senate can block nominations to regulatory posts. However, key federal agencies are already under Democratic leadership and will remain so. In cases where a future vacancy occurs, the Biden administration can bypass the Senate and appoint acting agency heads, a tactic used during the Trump administration."
Simon said he is expecting “a great deal of GOP focus on ESG, including legislation to prevent advisers from considering so-called non-pecuniary factors in retirement plans," adding that legislation introduced by Kentucky Rep. Andy Barr and could gain some traction.
If Democrats retain control of the House and Senate, markets might sell off, Gardner said. However, there may still be a level of gridlock as the Senate majority would likely remain tightly split, and Democrats have shown how difficult it is to pass the Biden agenda through a 50-50 Senate, he added.