What’s Next for the SEC After the Election

Congress created the SEC in 1934 as an independent agency, and its goal was to insulate the watchdog of US securities markets from political meddling.

Still, elections hold consequences for the SEC and the agency’s priorities.

Why? There are a few reasons:

1. Congress approves the SEC’s funding, and it can add policy riders to the appropriations.
2. The president nominates commissioners, who are confirmed by the Senate.
3. The president names the chair, which means the SEC’s leadership and capacity are heavily influenced by the politics of the legislative and executive branches.

So, what happens after the election? First, let’s quickly review where we are today.

The SEC has a full complement of commissioners: two Republicans and three Democrats. And many votes over the past few years have been on strictly partisan lines.

Though the president is responsible for their nominations, the commissioners won’t be replaced all at once. SEC commissioner terms are staggered such that no one term exactly coincides with the president’s term, which is facilitated by the fact that commissioner terms are five years.

Commissioners Jaime Lizárraga and Mark Uyeda’s terms expire in 2027 and 2028, respectively, leaving them insulated from the election politics this year and next. However, Chair Gary Gensler’s term expires in June 2026, raising questions about his future under the next president.

Additionally, Commissioner Caroline Crenshaw’s term has already expired. President Joe Biden renominated Crenshaw, but the vote has been delayed in the Senate Banking Committee, so it is unlikely that she will be voted on before the end of this legislative session. Consequently, she will have to be renominated by the next president.

If History Is Any Guide, We Will Likely Have a New Chair

Historically, SEC chairs have resigned each time a new administration took office.

In each executive transition since President Ronald Reagan, SEC chairs announced their decision to step down shortly after the election results, even when they had more than a year left in their terms—and even when both presidents were of the same party. That was the case in the 1988 Reagan-Bush transition when the active Chair David S. Ruder stepped down.

In some instances, chairs stayed on for a few months after the transition. But in every election since 2008, the chair announced their intent to step down just after the election and then left the SEC either on Inauguration Day or before.

That means Biden-appointed Gensler may step down even if Vice President Kamala Harris is elected president.

Here’s where history becomes less useful.

Gensler stepping down could actually pose problems for a Harris administration as more confirmations could be difficult for the president to accomplish. This is particularly true if the Republicans control the Senate and are unwilling to vote to confirm a Harris nominee.

In terms of policies, Gensler and Harris’ views are aligned in areas such as climate. Gensler has stated that “far more investors are making investment decisions that are informed by climate risk, and far more companies are making disclosures about climate risk,” and Harris has spoken in favor of climate policy. However, Gensler and Harris differ on key areas, such as cryptocurrency. Further, Gensler’s unpopularity may make it appealing to replace him.

What if Chair Gensler Does Stick Around?

Former President Donald Trump promised that if he takes office, he will remove Gensler if Gensler does not resign on his own, as is customary.

Commissioners can only be removed for misconduct after impeachment is initiated by the House and a trial is held by the Senate. So, Trump wouldn’t have the ability to remove Gensler from the SEC altogether.

However, the president names the SEC chair from among the confirmed commissioners. Most legal scholars believe that the president can essentially demote a chair to commissioner status, and precedence indicates the president could likely name a current commissioner as chair for the rest of that commissioner’s term, without Senate confirmation.

If Trump is reelected, he could then nominate a Republican commissioner to replace Crenshaw without even bringing her candidacy to a vote. This scenario could allow for the nomination of a new chair if Gensler does not step down in a timely way.

Alternatively, Crenshaw’s renomination could be held regardless of which president holds office, as is often done, to be confirmed in conjunction with a Republican candidate—perhaps a new chair replacing Gensler or when Commissioner Hester Peirce’s term is up mid-2025.

Concluding Thoughts

Much of the SEC’s agenda will depend on the outcome of this election. Will the SEC continue to defend its climate rule in court? Will it continue to pursue crypto enforcement via cases with large fines?

These questions depend on the next chair, and the legacy of Gensler’s term rests in the hands of someone who may not be confirmed for some months.