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[Music]
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all right folks we finally talked about
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fintech for an entire 35 minutes was
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that not gripping okay we did it for 35
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minutes now back to policy back to
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politics for eight days from an election
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it's time for a very unique conversation
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something that we don't do very often
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here at money 2020 and by very often I
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mean really ever is have some someone
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call in virtually for a conversation but
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sometimes the world the world just forms
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around a conversation and sometimes that
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person may be in a place in life where
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showing up in person to a conversation
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like this might actually not be ideal
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maybe there's some history and digital
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assets that a portion of the financial
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industry might not agree with maybe
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there's some other underlying issues
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that I'm not going to get to because I'm
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a third party and I'm just here to
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introduce the session that being said we
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do have a very interesting conversation
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coming up Gary guinsler may have heard
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of him chairperson I don't know why it
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says chairperson but chair of the US
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Securities and Exchange Commission the
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SEC again might have heard of it and we
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have hope King senior business reporter
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from axios here to have candidly what I
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would call one of the harder jobs today
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she gets to sit in this seat talk to
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Gary through a zoom link and have to
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deal de with your opinions and reactions
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through the whole thing so with that
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let's get a little warmth let's get a
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little excitement going for Hope and
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let's put our hands together for Hope
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and she'll get Gary up here in a second
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after that come on
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folks hello everyone I am so excited to
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be here it is actually my first money
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2020 I don't think that I'll be able to
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talk this one but we will try um thank
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you all so much for being here in the
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room we have a really exciting
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conversation coming up I know regulation
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might not be the most fun topic but
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trust me we will be having fun today so
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without further Ado I am so pleased and
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honored to introduce the chair of the US
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Securities and Exchange Commission Gary
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Gensler thanks good to be with you so
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good to be with you I was supposed to be
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sitting first I'm sorry Cara um first
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first of all chair Gensler I do believe
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that you had a birthday recently am I
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correct yeah my identical twin brother
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Rob had the same birthday yes well happy
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belated birthday um for those of you who
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don't know um you are a Libra which is
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with an assign for the lbra as the scale
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which I think is so on point for you let
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me just for those who don't know what a
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Libra is balance Harmony and Justice
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Define Libra energy is that an accurate
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portrayal and picture of your SEC
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personality hope I think I'm going to
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leave that to others I'm I'm like I look
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I feel remarkably blessed to be asked to
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do this job I'm basically a markets guy
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was a Colman Sachs for 18 years neither
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of my parents went to college but I I
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learned a little bit about markets from
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my dad who had a small business and I
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believe deeply in them so if that's
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Libra I don't know you you tell me I
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also believe in our great democracy and
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finding path forwards to solve problems
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for the the public investing and issuing
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public is what my job is okay I I just
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really want to know though what did you
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do for your birthday you're a big movie
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fan did you go see
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Joker wait say did you see did you see
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Joker you're a big fan of the
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movies no I well I like Ron car but no I
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did not watch Joker on my birthday okay
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I don't think a lot of people did either
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so as a kind of birthday gift to you
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no I mean have you seen the reviews they
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are terrible and it breaks my heart um
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but as a birthday gift to you you know
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you do a lot of these interviews and I
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actually want to know what you want to
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talk about what do you crave to talk
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about more than all the other questions
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that the media comes at you
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with well in a live craphy and
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everything I don't care talk about my
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daughters but they're they're more
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Central I have three daughters much more
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Central in my life than anything else
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but I assume that you've got some really
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great
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questions look one I want to thank the
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audience I didn't FL to Las Vegas not
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for the reasons that the introducer said
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I
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mean by the way I'm glad to talk about
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whatever topic hope wants to chat about
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um it's just you invited me at a time
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that was inconvenient to get on a flight
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out to Las Vegas um but look we've
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achieved a lot at the SEC we laid out
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5055 project and at the core of those
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projects and and we've completed I think
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it's now 44 or 45 of them these projects
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are about driving lower cost and lower
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risk or as The Economist called
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efficiency and
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resiliency in our Capital markets and
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our markets in the middle are the
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greatest in the world we're 40 to 50% of
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the world's Capital markets we're only
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22 or 3% of the world's economy so we're
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the we punch above our weight class
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we're the destination where other
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countries want to come into our Capital
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markets but we cannot take that for
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granted I think that um listen it might
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be decades away but there are other
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nations that really want to take that
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lead on us and they want to and so I
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think of everything we can do to lower
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the cost lower the risk in our stock
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markets and our treasury markets and
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elsewhere across this $ 1220 trillion
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Capital markets well I know a lot of
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people would loved to see you here too I
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know I would have um your schedule has
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been pretty packed lately lots of media
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appearances would you say these are a
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series of exit
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interviews no no not at all I mean it
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just it's a fall meeting schedule uh uh
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it does seem that trade
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associations and that's not what money
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2020 is but it does seem that trade
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associations have their annual
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conferences either in the spring or the
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fall and so yes I did some conferences
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in the last week with the uh Securities
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industry financial Market Association
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and with blumberg global regulatory
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conferences so it just happens to be the
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ab in flow of these things so if this
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isn't a campaign to keep your job
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either no hope listen I I feel so
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privileged to be in a job like this it's
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a great job with a great agency of 5,000
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plus people um uh I will say this for
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your audience uh for a lot of legal
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reasons I'm not involved in the campaign
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I'm not I'm not going to comment on it
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but democracies that's a great thing
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about America democracies have
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consequences but uh we're going to
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continue to do that which we do well at
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the
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SEC um until um as they say the ref caus
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the whistle well we're going to get into
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all the policies a little bit later but
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I have to ask these burning questions
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that I know are on the minds of a lot of
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people in the room and in the public
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public now um so just on this timing
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question continue on this theme so the
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SEC chair traditionally resigns on or
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before inauguration if their party loses
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do you see yourself as a traditional SEC
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chair well I'm honored to be the 33rd
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chair and there's I don't know if
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there's a traditional uh there's four or
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five of us that were not lawyers so I'm
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not a lawyer Joe Kennedy wasn't so that
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puts us in the minority uh but again I'm
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not going to comment on an election hope
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as much as you care to pull me in my
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legal term does uh as a commissioner
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runs till the middle of
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26 um but you're right that
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traditionally presidents get to decide
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who the chairs the SEC and that's a good
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part of democracy AB absolutely curious
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though what what was going through your
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mind when you saw the headline earlier
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this year that the former president said
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he would vow to fire you
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my daughters found it interesting I I
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could say that and they sent me a few
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text messages but other than that I mean
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I thought that's what presidents do to
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their entire cabinet as well so I I just
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thought that's part of democracy and are
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you afraid that from reports from
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Bloomberg uh that Democratic donors
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major ones are also pushing Kam Harris's
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team to replace you are you afraid of
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that outcome hope I I I sleep fine at
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night I what listen this is a job where
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every day is about helping investors uh
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as one of my predecessors said William O
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Douglas We're The investors's Advocate
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everybody else seems to have Advocates
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but we're the investor Advocate and then
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we also look to help issuers tap into
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the capital markets and making sure the
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middle the middle the markets themselves
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work for the investors and issuers and
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not the other way around and I think
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that's what we've done we just we just
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completed unanimously I would say very
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important rules about our stock markets
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a 50 or 60 trillion Doll
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Market uh that uh we're going to drive
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lower costs by allowing people to quote
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in smaller increments down to half a
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penny but also lowering the fees in that
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market we we also successfully move from
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and everybody in fintech would kind of
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say why' it take this long but we moved
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successfully from two-day settlement to
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one day settlement leading the world
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with Mexico and Canada joining earlier
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this year we're we're revising and
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reforming an awful lot of our our bond
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markets particularly our treasury
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markets so on and on I'm very proud of
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what we're doing we're going to continue
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to do that so if your term were to end
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before you'd like it to what would you
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say your proudest moment would be an
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achievement as SCC chair and you didn't
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mean this
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interview now it could be I would love
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that that would be homework there you go
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look I think it's just every day coming
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into work working for the American
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public and trying to drive as I say
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lower cost and lower risk in that system
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and it's it's within the law and how the
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courts interpret the law um but we've
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done a lot on corporate governance
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there's some public companies there in
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that audiences too and just in terms of
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instilling Greater trust in our Capital
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markets through how and we have certain
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legal authorities around corporate
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governance about how CEOs sell their
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stock and whether they can use material
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non-public information what we did in
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the equity markets what we've done in
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the treasury markets or even resolving a
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20year old dispute with the Chinese
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authorities about they have about 200
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companies in our in our markets and and
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resolving those disputes as well so
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there's a lot that I'm quite uh pleased
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with something that I think stands out
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to me is that in 2023 the SEC awarded
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nearly $600 million to whistleblowers
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which is a record high sum why is that
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so important that you want to help
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whistleblowers or at least know that uh
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give them that
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support So to instill trust in our
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Capital markets Congress gave this
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agency civil law enforcement Authority
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uh and then along with the Department of
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Justice uh we help them on the criminal
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side but instilling that Trust basically
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markets are not going to work unless you
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have a active cop on the beach so let me
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give you some figures that are public we
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get between 40 and
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50,000 tips complaints and referrals a
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year think about that 4,000 a month and
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we only have 1300 people on our
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enforcement division so whistleblowers
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are a really important part of the
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system as well and I want to give a big
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shout out to Senator Chuck Bradley from
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Iowa who's really been the kind of the
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leader on this for many decades and
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putting that law in place so we can
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award people
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reward uh Awards whistleblower Awards if
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they um it's technical but basically if
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they help lead to um U money coming back
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in and discouragements and like that and
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so that's a really important thing uh
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and it helps ultimately instill better
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trust in our Capital markets that now we
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have we we get about 18,000
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whistleblower tips a year and and so
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that's folks all across this great land
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coming in and suggesting something now
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we only bring about four or 500 law
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enforcement actions a year new actions
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so there are a lot of things that when
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we look at them we close them out we we
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look at them the facts in the law don't
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suggest something was infraction but
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where there is an infraction those
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whistleblowers help us and they
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ultimately help you all and the audience
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because they help and still greater
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trust in the system but what does that
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say to you about why the kind of policym
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that you've been pursuing is
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necessary well I think the policym is
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necessary because technology is changing
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so rapidly in business models that's
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what this conference is about money 2020
00:13:48
it's about I know you're talking a lot
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about open banking a lot about
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artificial intelligence these are
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changing the
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way that people in invest and money
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moves around the globe how information
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moves around the globe and ultimately
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the human existence itself as we
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automate that which is in our brain
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through artificial intelligence and so
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as markets technology and information
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change it's critical that our rules also
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change for the highways of finance and a
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lot of times Regulators are criticized
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for moving too slowly on their rules not
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keeping up with the Cas of innovation it
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seems like you want to take the opposite
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approach and you want you're projecting
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potentially some of these challenges is
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is that why you're going after um let's
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say AI washing is a big one for you
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lately so two points uh I do feel with
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the privilege of service comes a
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responsibility of the public to lay on
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an agenda and move on that agenda and
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we're appropriate to back off we don't
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we don't bring enforcement actions
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against every folk we investigate and we
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don't finalize every rule that we
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propose but I do think that it with that
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privilege comes a responsibility to move
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within one's time in in terms of
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artificial intelligence look I think
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it's likely to be the most
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transformative technology of our time
00:15:17
and I'm not just talking about
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generative AI artificial intelligence
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has been used for 10 or a Dozen Years
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even the US Postal Service uses it come
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on I mean it's right you know and and
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and so many of the members of that a
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your audience there is are using it and
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been using it for years before
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generative
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AI but with that with that incredible
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transformation we can drive to Greater
00:15:45
efficiency we can gr greater access in
00:15:47
our Capital markets but there's also
00:15:50
some things to think about and you
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mentioned
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one you know I don't know that old
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saying do what you say and say what you
00:15:59
do in essence don't lie to the public
00:16:03
so there are some folks that are out
00:16:06
there bragging about using AI or using
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AI in a certain way and they're not even
00:16:10
doing it but I would say the same thing
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don't don't brag about anything that
00:16:14
you're doing and don't do it you know
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say what you do do what you say that's
00:16:18
the kind of saw that a Securities
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regulator would say if you're public
00:16:23
company if you're private company then
00:16:24
you've got to you know do that with your
00:16:26
customers and with your board of
00:16:28
directors but that's a little different
00:16:30
well where else have you seen and I I
00:16:31
mean I think the USPS might have a word
00:16:34
for that shade that you threw at them
00:16:35
well where have you seen Technology
00:16:37
Innovation help with transparency and
00:16:38
where have you seen it actually be
00:16:41
harmful look I think Technology
00:16:43
Innovation has helped throughout the
00:16:45
decades I mean the ticker tape itself
00:16:49
and the quotron Machine and then after
00:16:51
that Michael Bloomberg figured out how
00:16:53
to build this incredible Empire the
00:16:55
internet itself and we've driven down in
00:16:59
Capital markets in the US capital
00:17:00
markets we've driven down the cost of
00:17:02
trading in our stock
00:17:05
markets through uh brokerage
00:17:08
applications Robo advisors and so forth
00:17:12
but if 50 plus million Americans and
00:17:15
that's the real number 52 or three
00:17:17
million Americans
00:17:19
have investment advising advice right on
00:17:23
their cell phones so let's call most of
00:17:26
those a robo
00:17:27
advisors that can drive down costs and
00:17:30
broaden access lower the fees but it's
00:17:33
also important to make sure that we
00:17:35
don't put in conflicts in the algorithms
00:17:38
that the optimization functions are
00:17:41
still putting the customer's interest
00:17:43
ahead of the investment advisor rather
00:17:46
than the other way around so you know
00:17:49
the old rules still apply I'll say one
00:17:51
other
00:17:52
thing frankly fraud is fraud don't don't
00:17:56
use the artificial intelligence to lie
00:17:59
to the public or do a deep fake or
00:18:01
create some scenario that's not real and
00:18:04
if you're the one deploying the
00:18:06
algorithm don't use it to manipulate
00:18:09
markets and by the way the algorithm
00:18:13
itself is still yours your deploying
00:18:15
that algorithm yeah a fact set search of
00:18:19
the word uh the term AI has come up with
00:18:23
a record number just in the first
00:18:24
quarter in terms of earnings reports I'm
00:18:26
I'm wondering if you if you feel that's
00:18:28
too much but just just broad no no by
00:18:30
the way I don't hope I just I don't
00:18:34
think it's too much or too little what
00:18:36
public companies have done for decades
00:18:39
they do really well in the main there's
00:18:41
always going to be outliers that do poor
00:18:43
things they describe to their
00:18:46
shareholders what they're doing what
00:18:48
their material risks are what the
00:18:50
opportunities are that they're facing um
00:18:53
and artificial intelligence is one of
00:18:54
those things and it's an
00:18:57
opportunity as much as it's probably an
00:18:59
opportunity more than it is a challenge
00:19:02
but it's also going to change so many
00:19:04
things many of the companies in the
00:19:06
audience there will be the disruptors
00:19:08
and they will disrupt the largest
00:19:10
financial institutions I can't tell
00:19:12
which one of your audience members is
00:19:14
going to be like that big company five
00:19:18
to 15 years from now but somebody in
00:19:20
that audience is going to really disrupt
00:19:23
uh big Banks and Wall Street and that's
00:19:26
a good thing for America I'm just saying
00:19:28
saying don't lie about it so so facts
00:19:30
that shows that there were about 200
00:19:32
mentions of AI which is more than double
00:19:35
the 5year average in your mind what
00:19:37
percentage of that do you think is AI
00:19:39
washing I I don't have a I don't have a
00:19:42
number and hopefully very little of it
00:19:44
but look this happens over time in the
00:19:47
internet bubble in the late 1990s there
00:19:49
was a lot of we're doing this with the
00:19:51
internet so forth and so on so um in in
00:19:56
times when it catches the invest
00:19:59
fancy of course most SE sues you know
00:20:03
the chair and the CEO suite and
00:20:05
everything are thinking about how do I
00:20:07
Market to investors so you just want to
00:20:10
just want to be careful not to get out
00:20:12
over your you know sort of exaggeration
00:20:14
skis on that you don't want to greenw
00:20:16
wash either I mean just that that's the
00:20:19
core thing investors are Savvy
00:20:21
ultimately they'll figure it out but you
00:20:25
there's a real benefit to the capital
00:20:28
markets that we have anti fraud
00:20:30
provisions and that's I don't I don't
00:20:32
have any estimate for you and hopefully
00:20:35
it's small but even that small group
00:20:37
needs to show a say behave is the SEC
00:20:41
using generative AI right now are you
00:20:42
using it in your own
00:20:44
life um we we use artificial
00:20:47
intelligence um we do it in sometimes in
00:20:50
the
00:20:51
surveillance with 5,000 Folks at the
00:20:55
SEC they use it to sort of look at
00:20:58
Market data uh particularly in our
00:21:01
Market oversight our examination and
00:21:04
enforcement our our Economist I use it
00:21:08
um but it's not necessarily generative
00:21:11
AI I just want to say that okay so you
00:21:15
have led this uh you know organization
00:21:18
through um a big crisis the the GameStop
00:21:21
Saga I'm wondering what lessons you
00:21:23
learned from
00:21:25
that you know it was interesting it was
00:21:27
right before I came into office Jen saki
00:21:29
who was was then uh the White House
00:21:32
Press Secretary in her first week of the
00:21:34
job was like oh my God what's all these
00:21:36
questions were coming in I take a couple
00:21:38
of lessons
00:21:41
um one uh the plumbing matters some of
00:21:46
the stuff that again many of the members
00:21:48
in that audience focus on how to move
00:21:50
payments how to connect uh uh apis this
00:21:54
whole open uh banking movement and so
00:21:56
forth which is not new by the way other
00:21:59
countries other countries have leaned
00:22:01
way into it even when I was back at MIT
00:22:03
I was I took one lecture a year in my
00:22:06
Finch course and taught about open
00:22:08
banking but back to GameStop I think the
00:22:11
market Plumbing work matters and
00:22:14
unfortunately for a lot of investors
00:22:16
they got shut out of the market and I
00:22:19
think that was unfortunate it's not good
00:22:20
to shut people out of the market so we
00:22:22
updated and I as I said we shortened the
00:22:25
market Plumbing to one day settlement
00:22:27
rather than two I think another another
00:22:28
thing was the use of of what was called
00:22:32
gamification but behavioral prompts and
00:22:35
nudges we all get them we get them on
00:22:38
the streaming apps I get them for
00:22:40
romantic comedies I hope you might get
00:22:42
them for other types of movies or you
00:22:45
might get behavioral prompts about some
00:22:47
journalist axio is you know great story
00:22:51
um but in finance if you're giving
00:22:55
behavioral prompts to somebody still
00:22:57
you've got to put the C customer the
00:22:58
investor ahead of The Brokerage app
00:23:01
you've got to put the investor ahead of
00:23:04
the in Robo advisor and I'd say the
00:23:07
third thing was really about the market
00:23:09
structure itself we had not updated our
00:23:11
us Equity Market structure since 2005 in
00:23:14
any significant way some of my
00:23:17
predecessors had taken a run at it
00:23:20
but we proposed we adopted unanimously I
00:23:24
would say proudly uh you know real
00:23:27
changing rules around the markets to
00:23:29
lower the costs the fees coming down by
00:23:33
2/3 from 3/10 of a penny to a maximum
00:23:36
fee of one tenth of a penny and also
00:23:39
allowing more efficient pricing where
00:23:42
the quotations can be down to half a
00:23:44
penny instead of a penny um so those are
00:23:47
some of the lessons out of of those
00:23:49
events from early 21 and do you believe
00:23:51
that Robin Hood is now safer or better
00:23:53
than it was three or four years
00:23:56
ago I mean speak about one uh um broker
00:24:01
versus another broker that's for
00:24:03
everybody to figure out which Brokers
00:24:05
they want to use but I think that the
00:24:09
rules that we put in place about Central
00:24:11
clearing the rules that we also put in
00:24:13
place that investors can get more
00:24:17
information about their execution
00:24:19
quality that will that will enhance uh
00:24:22
their experience and the rules we just
00:24:25
adopted which go into effect next
00:24:27
November I think will lead to uh uh less
00:24:32
costly markets more competitive markets
00:24:35
and I think shortening the settlement
00:24:37
cycle makes the whole system safer
00:24:40
similar to what we did on money market
00:24:42
fund reform that we we had we learned
00:24:45
some things when the covid crisis hit in
00:24:48
2020 and and we address that and also
00:24:52
what we're doing in the 28 trillion US
00:24:55
Treasury markets just really quickly
00:24:56
early thoughts on the New York Stock as
00:24:58
a proposal to move to 22-hour
00:25:01
trading look it's interesting we're the
00:25:03
we're the um I can't speak directly to
00:25:07
that because that might be a filing in
00:25:09
front of us I might have to vote so just
00:25:10
for all of your members I'm not trying
00:25:12
to avoid the question hope so let me
00:25:14
just more a little bit more General than
00:25:16
one filing
00:25:18
um we are the market of destination and
00:25:21
you sometimes think about that from 9:30
00:25:24
to 4:00 so you you can you can do the
00:25:27
math 6 and half hours but we have we
00:25:30
have the night market also from 4 to 8
00:25:33
we have the the early market right now
00:25:36
already from 400 am to 9:30 in the
00:25:39
morning
00:25:41
overnight you in Asia you can trade us
00:25:45
Securities over the counter and on
00:25:47
what's called alternative trading
00:25:49
systems so to the
00:25:52
extent that we have a 24-hour market in
00:25:56
many assets us treasuries trade 24 hours
00:26:00
a day five days a week a little bit on
00:26:03
the
00:26:04
weekends us equities for the top 100
00:26:07
names generally will trade around the
00:26:11
globe best liquidity deepest market
00:26:15
during 9:30 to 400 pm. but people can
00:26:18
trade it around the globe and so whether
00:26:21
it's New York Stock Exchange NASDAQ
00:26:24
Chicago Board sibo we also have a filing
00:26:27
in front of us for a new exchange called
00:26:30
24x I'm not going to speak on any of
00:26:33
those but I'm saying it seems that the
00:26:35
market has asked maybe we can expand
00:26:39
these hours out and what's critical is
00:26:42
are you protected yeah will you be
00:26:44
protected and is it transparent will you
00:26:47
get what's called a tape yeah when I was
00:26:50
growing up we still called it a tape but
00:26:52
but basically a
00:26:54
Consolidated um information about about
00:26:58
the transactions in a realtime basis uh
00:27:02
overnight at 1:00 a.m. and 3:00 a.m.
00:27:04
will you get uh it's called a sip but
00:27:07
that's a tape uh will you be protected
00:27:10
with pockets of illiquidity uh in
00:27:13
something that's called a limit up or
00:27:15
limit down but I I digress into the
00:27:17
technical side of the
00:27:19
job really quickly on crypto what do
00:27:22
most people get wrong about where you
00:27:23
stand on crypto
00:27:29
I I it's a great question look I'm going
00:27:32
to say this uh later this week is sweet
00:27:37
16 to Satoshi nakamoto's white paper
00:27:40
eight pages which WIS and Still Remains
00:27:43
an Innovative paper about data data
00:27:47
processing and ledgers that that that
00:27:50
what we all have come to call blockchain
00:27:53
technology um but that's not the
00:27:56
question the question is if you are
00:27:59
asking the public for money and that
00:28:03
public is investing in
00:28:05
something there in lies protections that
00:28:08
Congress put in place in the Securities
00:28:11
laws and those protections are important
00:28:14
protections and it really comes down to
00:28:16
this it comes down to investors get to
00:28:19
decide as long as the folks raising the
00:28:22
money the entrepreneurs are giving them
00:28:25
disclosures on their material risk yeah
00:28:28
I'd say the second thing hope is I I
00:28:30
sometimes hear about digital assets and
00:28:33
so forth everybody in that audience
00:28:36
everybody in the money 2020 audience
00:28:39
deals in digital assets right now I mean
00:28:43
how many of you have actually get your
00:28:46
pay delivered in coins and paper
00:28:49
currency you don't how many of you
00:28:51
bought your airline tickets and coins
00:28:54
and paper currency you don't we live in
00:28:57
a fully digital money world right now
00:29:01
and whether it's digital dollars digital
00:29:04
Yen Juan Euro Sterling we live in a
00:29:08
digital world now it's against the law
00:29:10
actually to have paper treasury
00:29:12
Securities the US Treasury Department
00:29:14
issues digital so you've got to have a
00:29:17
value proposition that's something
00:29:20
Beyond digital is what I'd also say um I
00:29:25
I want to know if you have any regrets
00:29:27
about the way that you may have handled
00:29:29
crypto
00:29:32
regulation look I I think there's
00:29:36
nothing incompatible about Satoshi
00:29:39
nakamoto's Innovation and it's a real
00:29:41
Innovation about how to have a
00:29:43
decentralized ledger system there's
00:29:45
nothing incompatible about that with the
00:29:47
US Securities Law that fundamentally the
00:29:49
US Securities Law is about protecting
00:29:53
investors that are investing in somebody
00:29:55
else's project hoping for a better
00:29:57
future
00:29:58
[Music]
00:30:00
and though and I've said this I'm not
00:30:03
prejudging anyone token but there's 15
00:30:05
to 20,000 of these
00:30:07
projects and though some of them are not
00:30:10
under the Securities
00:30:12
Law many of them have a group of
00:30:15
entrepreneurs in the middle and the
00:30:17
investing public is hoping for a better
00:30:19
future and it's a field where
00:30:21
there's billions of dollars of losses
00:30:24
have happened and you know we don't need
00:30:26
to go through the the of these uh the
00:30:29
most famous of two years ago are you
00:30:31
know in jail right now and not just one
00:30:33
of them but multiple of them so um many
00:30:37
more are not right I mean many more are
00:30:40
not so do you have any regrets what I'm
00:30:43
saying you you you said I would I
00:30:46
would the only way whether whether it's
00:30:49
in any part of our broad Capital markets
00:30:52
and our broad worldwide Capital markets
00:30:55
are about 250 to 300 trillion us is 120
00:31:00
plus trillion of
00:31:01
that any part of that
00:31:04
worldwide Capital
00:31:06
markets they benefit from rules of the
00:31:10
road I'm unabashedly a market person I'm
00:31:13
unabashedly uh associate with this great
00:31:16
thing in America called capitalism it's
00:31:19
a really important thing but I think we
00:31:21
do better the public does better with
00:31:24
some regulation in markets you wouldn't
00:31:28
want to have a football game by the way
00:31:30
without some refs on the field it would
00:31:33
very quickly look like rugby and after a
00:31:34
while it wouldn't even look like rugby
00:31:36
it would all break down hope and and
00:31:40
Congress understood that in setting up
00:31:42
the the SEC and setting up the commodity
00:31:45
Futures Trading
00:31:46
commission um the these Help capital
00:31:49
markets work and they lower the cost of
00:31:53
capital right and how did they do that
00:31:54
because they instilled trust and they
00:31:56
bring the invest public end we've got
00:32:00
more than 50 million Americans with
00:32:02
separately managed accounts by
00:32:04
investment advisors we've got 58% of the
00:32:07
American public invested directly or
00:32:09
indirectly in the US Stock
00:32:11
Market how do you build that trust
00:32:13
without some you know rules of the road
00:32:17
around disclosure around conflicts
00:32:19
around manipulation and the like so no
00:32:22
you don't have any
00:32:24
regrets I again it's your it's how
00:32:27
you're articulating the question I've
00:32:29
already told you that I think there's
00:32:31
nothing
00:32:33
incompatible this technology the
00:32:36
blockchain technology and how you store
00:32:38
this with the Securities
00:32:41
laws far too many people have lost money
00:32:44
and I'm not just talking about normal
00:32:46
markets ups and down right I'm talking
00:32:49
about the the the extent of of uh
00:32:53
problems in grift in the field all right
00:32:55
we we'll move on um how do you think
00:32:57
think Capital markets will be impacted
00:32:59
by seemingly deeper political divides
00:33:01
and geopolitical
00:33:05
tensions I think Capital markets trade
00:33:07
around all sorts of uh information and
00:33:11
all sorts of risk ultimately there
00:33:14
were we benefit from the pricing of risk
00:33:18
and the pricing and I would say
00:33:20
allocation of money and risk and
00:33:24
um I I think again I'm not going to
00:33:27
comment on elections that's I'm paid not
00:33:30
to do that hope yes but I think the
00:33:33
capital markets uh our US capital
00:33:36
markets are quite robust and they
00:33:39
they they will persist my job in what I
00:33:43
do is trying to make them the most
00:33:45
efficient most resilient for hopefully
00:33:48
for decades to come does the political
00:33:50
environment though make it harder for
00:33:52
you to do your job I mean this summer
00:33:54
the Supreme Court ruled that defendants
00:33:56
accused of fraud by the SEC have a right
00:33:58
to a jury trial so how has that impacted
00:34:00
your
00:34:03
enforcement let me say this I'm quite
00:34:05
proud we we're five member commission
00:34:07
and I think we're better as a nation
00:34:08
that it's five of us not one of us I
00:34:10
think that's really helpful we vote on
00:34:12
about 11 or 1200 things a year
00:34:15
literally um you're more familiar with
00:34:18
some of the you know the these policy
00:34:21
matters which are rules but even on the
00:34:23
44 rules that we voted
00:34:26
on over half half of them are bipartisan
00:34:29
uh we just finished one last Friday on
00:34:32
Clearing Houses unanimous but the large
00:34:35
Equity Market role was also unanimous
00:34:38
things like our uh how how funds
00:34:42
registered investment funds name
00:34:44
themselves and so forth was bipartison
00:34:46
was
00:34:47
41 on and on I could talk
00:34:50
about the the work we do with our
00:34:53
colleagues we're not always that way
00:34:55
there are times where we're split uh
00:34:58
32 um but I I'm very proud and I think
00:35:02
the public benefits from that EB and
00:35:04
flow and that back and forth amongst the
00:35:06
five of us um now in terms of in terms
00:35:11
of enforcement and rulemaking we do it
00:35:14
within what the right the Congress
00:35:16
writes and how the courts interpret it
00:35:18
and hope if the courts interpret
00:35:20
something differently as they did you
00:35:22
you were talking about a case called
00:35:24
jassy yes that the Supreme Court ruled
00:35:26
on we adjust but we had already been I
00:35:31
would say pre- adjusting in that case I
00:35:34
think we were down to less than a
00:35:36
handful of litigated matters in front of
00:35:39
our administrative law judges even
00:35:41
before The Supreme Court down from 50 to
00:35:44
100 when right before I got there
00:35:48
so we we had been adjusting already
00:35:53
but if if the court
00:35:56
rules in a way that we didn't think they
00:36:00
would or we didn't agree with we still
00:36:01
adjust I I don't know hope what would
00:36:03
you do that's what we that's a part of
00:36:05
our great democracy and that's that's so
00:36:08
one because it's the right thing and two
00:36:11
it also instills confidence in the SEC
00:36:14
that you say ah they get it the court
00:36:16
the court called called it a different
00:36:18
way CH gor we're out of time so my last
00:36:21
question to you when I was invited to to
00:36:24
talk with you in this Fireside I I was
00:36:27
very excited I was telling my colleagues
00:36:29
and and one of them said to me wow money
00:36:32
2020 I mean this this crowd hates
00:36:34
Gensler uh I I don't know if you knew
00:36:36
that or now that you that you do know I
00:36:39
mean is that a sign for you that you're
00:36:40
actually doing your job is that the
00:36:43
middlemen maybe that you're targeting
00:36:45
and and trying to make more transparent
00:36:47
uh that that's your your goal poost of
00:36:49
how you measure
00:36:51
success no hope I don't measure success
00:36:54
through the animist that what we do so
00:36:57
but I look I
00:37:00
money wide wide range of folks whether
00:37:03
they're Financial technology firms
00:37:05
whether they're uh in in finance itself
00:37:09
my God I'm a i 18 years at Gman
00:37:12
Sachs I spent four or five years up at
00:37:16
MIT because I I was asked by now a Nobel
00:37:19
laurate Simon Johnson recruited me to go
00:37:22
up there but my God he's this Nobel
00:37:24
laurate now but Simon invited me to go
00:37:27
go up there to and what better place to
00:37:29
do it but to the intersection of
00:37:33
money Finance money and
00:37:36
technology and I I think that that we
00:37:40
constantly are changing and I want to I
00:37:43
want to see if how we can better do this
00:37:46
for investors and issuers but yes
00:37:49
there's some that are going to be the
00:37:50
market intermediat in the middle the
00:37:52
people that are operating the stock
00:37:54
exchanges or the Clearing Houses or the
00:37:56
Brokers or investment advis ERS that
00:38:00
have different incentives than somebody
00:38:03
like I do now if I was still at Gman sax
00:38:05
I might not like some of the things I'm
00:38:06
doing but my job is for 330 million
00:38:10
Americans and we do it with an openness
00:38:13
we want to hear the comments we want to
00:38:15
hear the feedback when we lose in court
00:38:18
we adjust but our clients still
00:38:21
ultimately the 330 million
00:38:24
Americans and and the entrepreneurs in
00:38:27
the room that are trying to start out
00:38:29
and Access Capital and take on the
00:38:32
incumbents um and I have deep respect
00:38:36
for the trade associations as well but
00:38:38
sometimes their their associations are
00:38:42
you know have the large um incumbents
00:38:45
that are are important members for them
00:38:48
so um but keep the comments coming
00:38:51
that's how we do better I I mean it
00:38:53
seems like sometimes people who are in
00:38:55
this room and outside of this room
00:38:56
trying to make money forget that they
00:38:58
are part of the 330 million Americans
00:39:01
that you're also trying to protect this
00:39:03
is almost like sometimes maybe you're
00:39:04
seeing it in the way that you do your
00:39:07
job that maybe sometimes we're working
00:39:08
against ourselves is that
00:39:10
right
00:39:13
look I would say this anybody who wants
00:39:15
to do a job in public service all in
00:39:18
it's the greatest experience but it's
00:39:20
not for the faint of heart because
00:39:22
there's an awful lot of discourse
00:39:24
there's a lot of you know public debate
00:39:26
means debate
00:39:28
right it means people are going to
00:39:30
disagree and all we can do is just make
00:39:32
our best judgment given the law and the
00:39:35
economics of the time but I'd say for
00:39:38
folks that are also in the room thinking
00:39:40
about how do you want the markets to be
00:39:43
structured so you still instill a great
00:39:45
deal of competition in the market for
00:39:48
money and the inter intermediation of
00:39:51
risk that's where we're in we're not
00:39:53
we're not in the market for competition
00:39:55
for Widgets or competition for even for
00:39:59
all the great products that you're uh
00:40:02
you know servicing people on but for the
00:40:05
intermediation of money and risk that's
00:40:07
our Capital markets what we're trying to
00:40:10
do is use the tools of
00:40:12
transparency the tools of access the
00:40:15
tools of competition to promote lower
00:40:18
cost and that's that's what my
00:40:21
predecessor have done that's what the
00:40:23
next 33 will probably do as well well I
00:40:25
hope we get another chance uh it was
00:40:27
such an honor chair guer thank you for
00:40:29
spending time with us and thank you here
00:40:31
in the room as well and thank you all
00:40:33
for allowing me to do this through the
00:40:35
zoom call and everything like that so
00:40:37
hope thank you take care thanks thanks
00:40:40
everyone
00:40:41
[Music]
