Hagerty Calls Out SEC Chair Gensler for Weaponizing Agency Against American Investors

September 12, 2023

Wasting resources on ideological driven agenda prevents SEC from focusing on critical missions like preventing CCP broker-deals in American markets

WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, today criticized Securities and Exchange Commission (SEC) Chair Gary Gensler for weaponizing the SEC beyond its Congressional mandate with loosely interpreted sections of Dodd-Frank to target new technologies that expand access to American investors, rather than use the agency’s resources to oversee Chinese-government connected broker-dealers operating in the U.S.

“As you know, the Supreme Court has recently said that major regulations require clear congressional authorization,” Hagerty said. “Yet, Section 913(g), the provision that you rely most heavily upon, provides very limited authority to regulate in this space, not blanket authority for the SEC to ignore all the other binding language of the law and completely rewrite the standard of care for broker-dealers and for investment advisors […] you’re targeting a subset of the industry that’s despised by the left by applying a different standard for emerging tech.”

“What you appear to be doing here is trying to change the negotiating dynamics between two sophisticated parties in favor of one over the other—a clear abuse of power,” Hagerty continued. “One of these problems with such an ideological driven agenda is that important matters that are critical to the SEC’s mission fall through the cracks, as you waste resources on matters like this.”

Hagerty pressed Chair Gensler on Chinese-government connected broker-dealers operating retail stock and cryptocurrency businesses in the U.S., a more critical mission the SEC should be focused on.

“Recent congressional oversight letters and press reports have highlighted the growing trend of broker-dealers with connections to the Chinese government. These Chinese-linked firms are operating retail businesses in the U.S… some of these companies… even have registered representatives located in China… How can the SEC and [Financial Industry Regulatory Authority] actually oversee registered representatives and employees of these firms who are located in China, and why should these firms be allowed to register and do business with retail customers in the United States?” Hagerty asked.

SEC Chair Gensler responded that brokers in U.S. markets have “got to participate and play by our rules,” regardless of location, and that inspecting auditors in China is “quite a challenge.”

“I would encourage this allocation of resources to really focus on these sort of actors,” Hagerty concluded.

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