As the U.S. House Financial Services Committee prepares for a high-profile oversight hearing today, five members of the Securities and Exchange Commission (SEC), including Chairman Gary Gensler, are set to testify.
FOX Business obtained an exclusive preview from Commissioner Mark Uyeda, one of the two Republican members, who offers insight into what could happen.
The hearing, part of an annual oversight process, comes at a key moment as the SEC faces growing criticism over its regulatory direction under Gensler, who was appointed by President Biden in 2021. It will be the first time the full commission has testified together since 2019, given the possibility of a political shift at the commission following the 2024 presidential election.
Uyeda, who was appointed to the SEC by Biden in 2022, has been outspokenly critical of Gensler’s leadership. He accuses Gensler of pushing a progressive regulatory agenda that has inundated Wall Street with proposed rules, from climate disclosures to reforms to private fund governance and market structure. Uyeda warns that the agency’s approach has led to regulatory overreach and legal challenges.
“The Commission must return to being a constructive regulator,” Uyeda told FOX Business, adding that the SEC has “put out over 50 proposed rules with little thought as to how they will work together.”
Uyeda says the SEC’s aggressive rulemaking has led to rushed procedures, including short public comment periods and “reckless” implementation of rules that exceed the agency’s limited authority. Many of those rules are now facing judicial review, and the courts have pushed back on the SEC’s methods.
Another major point of contention is the SEC’s handling of the $2 trillion cryptocurrency industry. Uyeda specifically addresses the agency’s failure to provide clear regulatory guidelines for digital assets, arguing that this has stifled innovation. Uyeda believes that the SEC has focused too much on enforcement actions rather than providing a regulatory framework, leaving crypto firms with little direction on how to comply with existing laws.
“We have not provided rules of the road for crypto… nor have we provided a practical path to compliance with our rules. Instead, we have wasted time and money on crypto enforcement actions that provide limited guidance at best,” he said.
While the SEC has been directing its resources toward cryptocurrency enforcement, Uyeda criticized the agency for neglecting other areas of concern, such as protecting seniors from financial scams that could wipe out their retirement savings.
Today’s hearing is expected to be tense, as lawmakers from both parties are likely to scrutinize Gensler’s leadership. Uyeda noted that Gensler’s regulatory approach has drawn criticism from both Republicans and Democrats, with some questioning the SEC’s overall direction. The hearing could also highlight broader concerns about the politicization of the SEC, which is facing accusations of bias despite being intended to be an independent regulatory agency.
With the possibility of a Republican administration in 2024, Uyeda or fellow Republican Commissioner Hester Peirce could replace Gensler as SEC Chair, adding further significance to the upcoming hearing and the agency’s future.
*This is not investment advice.