All right folks, we finally talked about fintech for an entire 35 minutes. Was that not gripping? Okay, we did it for 35 minutes. Now back to policy, back to politics. For eight days from an election, it's time for a very unique conversation. Something that we don't do very often here at Money 2020, and by very often I mean really ever, is have someone call in virtually for a conversation. But sometimes the world just forms around a conversation, and sometimes that person may be in a place in life where showing up in person to a conversation like this might actually not be ideal. Maybe there's some history in digital assets that a portion of the financial industry might not agree with. Maybe there's some other underlying issues that I'm not going to get to because I'm a third party and I'm just here to introduce the session. That being said, we do have a very interesting conversation coming up. Gary Gensler, may have heard of him, chairperson—I don't know why it says chairperson—but chair of the US Securities and Exchange Commission, the SEC, again, might have heard of it. And we have Hope King, senior business reporter from Axios, here to have candidly what I would call one of the harder jobs today. She gets to sit in this seat, talk to Gary through a Zoom link, and have to deal with your opinions and reactions through the whole thing. So with that, let's get a little warmth, let's get a little excitement going for Hope, and let's put our hands together for Hope, and she'll get Gary up here in a second after that. Come on.
Hello everyone, I am so excited to be here. It is actually my first Money 2020. I don't think that I'll be able to top this one, but we will try. Thank you all so much for being here in the room. We have a really exciting conversation coming up. I know regulation might not be the most fun topic, but trust me, we will be having fun today. So without further ado, I am so pleased and honored to introduce the chair of the US Securities and Exchange Commission, Gary Gensler.
Thanks, good to be with you.
So good to be with you. I was supposed to be sitting first, I'm sorry, Cara. First of all, Chair Gensler, I do believe that you had a birthday recently, am I correct?
Yeah, my identical twin brother Rob had the same birthday, yes.
Well, happy belated birthday. For those of you who don't know, you are a Libra, which is, the sign for the Libra is the scale, which I think is so on point for you. Let me just, for those who don't know what a Libra is: balance, harmony, and justice define Libra energy. Is that an accurate portrayal and picture of your SEC personality?
Hope, I think I'm going to leave that to others. Look, I feel remarkably blessed to be asked to do this job. I'm basically a markets guy, was at Goldman Sachs for 18 years. Neither of my parents went to college, but I learned a little bit about markets from my dad who had a small business, and I believe deeply in them. So if that's Libra, I don't know, you tell me. I also believe in our great democracy and finding path forwards to solve problems for the public. Investing and issuing public is what my job is.
Okay, I just really want to know though, what did you do for your birthday? You're a big movie fan, did you go see Joker? Wait, say, did you see Joker? You're a big fan of the movies.
No, I well, I like Ron Howard, but no, I did not watch Joker on my birthday.
Okay, I don't think a lot of people did either. So as a kind of birthday gift to you—no, I mean, have you seen the reviews? They are terrible and it breaks my heart. But as a birthday gift to you, you know, you do a lot of these interviews and I actually want to know what you want to talk about. What do you crave to talk about more than all the other questions that the media comes at you with?
Well, in a live crowd and everything, I don't care, talk about my daughters, but they're more central. I have three daughters, much more central in my life than anything else. But I assume that you've got some really great questions. Look, one, I want to thank the audience. I didn't fly to Las Vegas not for the reasons that the introducer said. I mean, by the way, I'm glad to talk about whatever topic Hope wants to chat about. It's just you invited me at a time that was inconvenient to get on a flight out to Las Vegas. But look, we've achieved a lot at the SEC. We laid out 50, 55 projects, and at the core of those projects, and we've completed I think it's now 44 or 45 of them, these projects are about driving lower cost and lower risk, or as The Economist called it, efficiency and resiliency in our capital markets. And our markets in the middle are the greatest in the world. We're 40 to 50% of the world's capital markets, we're only 22 or 23% of the world's economy, so we punch above our weight class. We're the destination where other countries want to come into our capital markets, but we cannot take that for granted. I think that, listen, it might be decades away, but there are other nations that really want to take that lead on us. And so I think of everything we can do to lower the cost, lower the risk in our stock markets and our treasury markets and elsewhere across this $120, $130 trillion capital markets.
Well, I know a lot of people would have loved to see you here too. I know I would have. Your schedule has been pretty packed lately, lots of media appearances. Would you say these are a series of exit interviews?
No, no, not at all. I mean, it just, it's a fall meeting schedule. It does seem that trade associations—and that's not what Money 2020 is—but it does seem that trade associations have their annual conferences either in the spring or the fall. And so yes, I did some conferences in the last week with the Securities Industry and Financial Markets Association and with Bloomberg Global Regulatory Conferences. So it just happens to be the ebb and flow of these things.
So if this isn't a campaign to keep your job either?
No, Hope, listen, I feel so privileged to be in a job like this. It's a great job with a great agency of 5,000 plus people. I will say this for your audience, for a lot of legal reasons, I'm not involved in the campaign. I'm not going to comment on it. But democracies, that's a great thing about America, democracies have consequences. But we're going to continue to do that which we do well at the SEC until, as they say, the ref calls the whistle.
Well, we're going to get into all the policies a little bit later, but I have to ask these burning questions that I know are on the minds of a lot of people in the room and in the public now. So just on this timing question, continue on this theme. So the SEC chair traditionally resigns on or before inauguration if their party loses. Do you see yourself as a traditional SEC chair?
Well, I'm honored to be the 33rd chair, and I don't know if there's a traditional. There's four or five of us that were not lawyers, so I'm not a lawyer. Joe Kennedy wasn't, so that puts us in the minority. But again, I'm not going to comment on an election, Hope, as much as you care to pull me in. My legal term as a commissioner runs till the middle of '26. But you're right that traditionally presidents get to decide who the chair is of the SEC, and that's a good part of democracy.
Absolutely curious though, what was going through your mind when you saw the headline earlier this year that the former president said he would vow to fire you?
My daughters found it interesting, I could say that, and they sent me a few text messages. But other than that, I mean, I thought that's what presidents do to their entire cabinet as well. So I just thought that's part of democracy.
And are you afraid that, from reports from Bloomberg, that Democratic donors, major ones, are also pushing Kamala Harris's team to replace you? Are you afraid of that outcome?
Hope, I sleep fine at night. Listen, this is a job where every day is about helping investors. As one of my predecessors said, William O. Douglas, we're the investor's advocate. Everybody else seems to have advocates, but we're the investor advocate. And then we also look to help issuers tap into the capital markets and making sure the markets themselves work for the investors and issuers and not the other way around. And I think that's what we've done. We just completed unanimously, I would say, very important rules about our stock markets, a $50 or $60 trillion market, that we're going to drive lower costs by allowing people to quote in smaller increments down to half a penny, but also lowering the fees in that market. We also successfully moved from—and everybody in fintech would kind of say why'd it take this long—but we moved successfully from two-day settlement to one-day settlement, leading the world, with Mexico and Canada joining earlier this year. We're revising and reforming an awful lot of our bond markets, particularly our treasury markets. So on and on, I'm very proud of what we're doing. We're going to continue to do that.
So if your term were to end before you'd like it to, what would you say your proudest moment would be and achievement as SEC chair? And you didn't mean this interview now.
Now it could be, I would love that, that would be homework. There you go. Look, I think it's just every day coming into work, working for the American public, and trying to drive, as I say, lower cost and lower risk in that system. And it's within the law and how the courts interpret the law. But we've done a lot on corporate governance. There's some public companies there in that audience too, and just in terms of instilling greater trust in our capital markets through how—and we have certain legal authorities around corporate governance—about how CEOs sell their stock and whether they can use material non-public information. What we did in the equity markets, what we've done in the treasury markets, or even resolving a 20-year-old dispute with the Chinese authorities about they have about 200 companies in our markets and resolving those disputes as well. So there's a lot that I'm quite pleased with.
Something that I think stands out to me is that in 2023, the SEC awarded nearly $600 million to whistleblowers, which is a record high sum. Why is that so important that you want to help whistleblowers or at least give them that support?
So to instill trust in our capital markets, Congress gave this agency civil law enforcement authority, and then along with the Department of Justice, we help them on the criminal side. But instilling that trust, basically, markets are not going to work unless you have an active cop on the beat. So let me give you some figures that are public: we get between 40 and 50,000 tips, complaints, and referrals a year. Think about that, 4,000 a month, and we only have 1,300 people on our enforcement division. So whistleblowers are a really important part of the system as well. And I want to give a big shout out to Senator Chuck Grassley from Iowa, who's really been the leader on this for many decades and putting that law in place so we can award people, reward, whistleblower awards if they help lead to money coming back in and discouragements and the like. And so that's a really important thing, and it helps ultimately instill better trust in our capital markets. Now we get about 18,000 whistleblower tips a year, and so that's folks all across this great land coming in and suggesting something. Now, we only bring about 400 or 500 law enforcement actions a year, new actions. So there are a lot of things that when we look at them, we close them out. We look at them, the facts and the law don't suggest something was an infraction. But where there is an infraction, those whistleblowers help us, and they ultimately help you all and the audience because they help instill greater trust in the system.
But what does that say to you about why the kind of policymaking that you've been pursuing is necessary?
Well, I think the policymaking is necessary because technology is changing so rapidly in business models. That's what this conference is about, Money 2020. It's about, I know you're talking a lot about open banking, a lot about artificial intelligence. These are changing the way that people invest and money moves around the globe, how information moves around the globe, and ultimately the human existence itself as we automate that which is in our brain through artificial intelligence. And so as markets, technology, and information change, it's critical that our rules also change for the highways of finance. And a lot of times regulators are criticized for moving too slowly on their rules, not keeping up with the pace of innovation.
It seems like you want to take the opposite approach and you're projecting potentially some of these challenges. Is that why you're going after, let's say, AI washing is a big one for you lately?
So two points. I do feel with the privilege of service comes a responsibility of the public to lay on an agenda and move on that agenda. And where appropriate to back off, we don't bring enforcement actions against every folk we investigate and we don't finalize every rule that we propose. But I do think that with that privilege comes a responsibility to move within one's time. In terms of artificial intelligence, look, I think it's likely to be the most transformative technology of our time. And I'm not just talking about generative AI. Artificial intelligence has been used for 10 or a dozen years, even the US Postal Service uses it. Come on. I mean, it's right, you know. And so many of the members of your audience there are using it and been using it for years before generative AI. But with that incredible transformation, we can drive to greater efficiency, we can drive greater access in our capital markets. But there's also some things to think about, and you mentioned one. You know, I don't know that old saying, do what you say and say what you do. In essence, don't lie to the public. So there are some folks that are out there bragging about using AI or using AI in a certain way and they're not even doing it. But I would say the same thing: don't brag about anything that you're doing and don't do it. You know, say what you do, do what you say. That's the kind of saw that a securities regulator would say. If you're a public company, if you're a private company, then you've got to do that with your customers and with your board of directors, but that's a little different.
