Agencies agenda including a plan to regulate Crypto Currency markets. This is two hours. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]. Senate committee on banking, housing and urban affairs will come to order. This meeting is for the first time in a hybrid format. Our witness is in person, Mister Gensler is here in person. Members have the option to appear in person or remotely. Once you start speaking there will be a slight delay before you are displayed on the screen. To minimize Background Noise click the mute button until its your time to speak or ask questions. You shall all have one box on your screen to show how much time is remaining. For those joining virtually you will hear about ring when you have 30 seconds and when time expired. Our speaking order will be as usual, that is by seniority. Those objecting in person or virtually and by seniority of members arriving alternating between democrats and republicans. Welcome Chair Gensler back to the committee. Five months ago today the senate confirmed you as head of the securities and exchangecommission, one of the historically most important jobs in the federal government. You have your work cut out for you over the past year and a half. Thedisconnect between the Stock Market and most americans lives has never been more painfully clear. Most of the country has been devastated by this awful virus. Hundreds of thousands have lost loved ones, family businesses and mothers were fourth leave their paid jobs indrugs and Millions Today still at risk of Infections T from their homes. You neverknow any of that by looking at the Stock Market. Its it hits new Records Month after month. 53 records since the beginning of the year. I popping gains in the Stock Market, crypto assets attracted millions in investment and like during past signs of all people the crisis opened the doors for bad actors looking to seize on peoples fears and insecurities. Pandemic related Fraudfrom Ponzi schemes to offers to invest in medical care skyrocketed last year. The sec stepped up to educate investors to punish bad actors. The dedicated public service and the commission continued tofight for all americans. College savings are at risk and many have been enticed by dramatic jumps in the value of new digital assets , they dreamed of riding the coattails and professional investors and celebrities in a new wave of public offerings and more speculative investments known as national Purpose Acquisition companies or stack. Some professional investors and celebrities make 30 millions look easy but as we are reminded time and time again from history is never that simple. Too often someones quick profit comes at theexpense of workers , sometimes even entirecommunities. Chair, its your job to make sure that efficient markets are balanced with strong enforcement that protects americans from the worst Wall Street created rest, even if that means challenging practices or shady investment products that previous chairs ignored and it means working to increase transparency with the last administration simply did not takeseriously. We all know that on this committee. The sec approved new Capital Disclosure, new human Capital Disclosure last year without requiring companies to provide even basic details or data. Just given some information we almost disdainfully said. Human Capital Business schools for the tens of millions of americans whowork for these companies. Despite the new standard of Investor Demand for central information used to judge how companies treat and manage these workers most pennies barely provide any additional information. My colleagues have been working to improve transparency. Senator warner from virginia introduced Workforce Investment Disclosure act to get companies to provide important information on how they pay and the train and invested workers and this bill will shed light on how companies outsource and subcontract their workers , such an important part of our economy now. Something we have written to the gao about. It makes companies more efficient than companies in past when in reality they hire the same number of workers. A number invisible to us under the Scope Disclosure of environment. Senator warnock introduced an act calling for significant new public disclosures from publiccompanies regarding the risk of climate change poses to their financial results and operations. These bills are good policy and the largest investors have been calling for more of this kind of information. Im a cosponsor of both bills. This would just be a stark transparency is only a first step to getting gcorporations and the biggest investors to behave better. Theres much more to already have the authority to do to make markets work better for the real economy outside of investment firms and has fun courtrooms. For too long financial systems cater to the big guys and let everyone else on their own. Are too many stories about how insiders aim the system. Big banks of used customers, brokers have taken advantage of customers and use the system to erase their misconduct. Private equityfirms treat workers as a cost to be minimum minimize. Where have we that before . They raise Rent And Evict families even during a pandemic. And of course no matter what happens to workers at the companies they rated for parts or families in the old mobile Home Complex where theyjacked up the rents. Or to the larger economy, the headphones and sponsors to big banks, the brokers of the Guys Team to do is fine. Thats System Isnt sustainable. Increasing Peoples Faith in markets in the financial system will lead to more and broader dissipation yet some of my colleagues say we should let the markets sorted out. They want to supply the fcc and your and other watchdogs hands. We know thats counterproductive. Hethe same thinking that led to a market collapsed 13 years ago that led to decades of more and more investments flowing to smaller and smaller share of the country. The last administration subscribe to that same always Wall Street view and left this country worse off than they found it. The damage is too vast to measure and our economy and markets are no exception. Investors have fewer tools to hold management accountable. Widows and families have Humor Protection as corruption runs rampant and serious conflicts of interest have too often been ignored. This administration is taking the economy and markets should work for everyone not just the wellconnected. They should reflect the economy we want with broadly shared prosperity and a growing middle class. When that happenS Peoplehave confidence that markets actually work for them, not just for Wall Street. Well see more americans say and invest in the future. Wa Chair Gensler, i look forward to the progress youre making towards these goals. Ranking member timothy welch. Chair gensler, its good to see you. Despite our disagreements i enjoy working with you. The sec has historically administered security laws on a bipartisan basis and during the process expressed concerns you might stray from this tradition and use the sec to advance a liberal political agendas such as combating global warming and and advancing socalled s social justice and the legal bounds of the Secs Authority Bo to pursue disclosures that are not priorities to the accounting company. Sadly this appears to be what you are doing. Youve added mandatory disclosures on global warming and human capital such as Board And Employee racial and Gender Identity to the Sec Agenda and youve essentially said if large investment advisories like blackrock and calipers who invest other Peoples Money if they want information about global Warming Or Diversity it must be disclosed even if its financially insignificant and irrelevant to a particular business. Even president obamas Sec Chair opposed using disclosure powers for the purpose of quote, exerting societal pressure on companies to change behavior rather than disclose financial information that primarily informs investment decisions. Thatsexactly what youre doing and youre well on your way to politicizing the Pca Ob after firing all the existing board members. It is not the Secs Role as a financial regulator with zero democratic accountability to address these political and social issues. Hsimilarly ive worried that he would favor the paternalistic push by someone left to restrict Investor Freedom under the guise of protection while actually arming retailinvestors. Such harm may result from your apparent opposition to the law which helped allow brokers to offer commission free trading. Payment forward allows a S Broker to keep a portion of the price improvement obtained by routing a transaction to wholesaler. To my knowledge the sec has not demonstrated any failure or all harm associated with payment protocol. Banning Payments Flow could very well have the effect of limiting commission free trading which would be agrave disservice to average investors. And likewise you criticize mobile apps that make investment easy as game of vacation. But in my view, delivering the product can customers like isnt a bad thing. And i worry that youre attempting to fix problems that dont exist today. Today is the best time ever to be a retail investor in the united states. Retail investors receive the best execution, a person of modest means and share in the gains of the tStock Market at negligible transaction costs. We see the tightest bid offers friends i ever atleast four major developments for retail investors made this all possible. Commission free trading, accounts with no minimum balances, low or no fee mutual funds and yes, userfriendly technology like mobile app. Investors can even voluntarily use a broker who declineS Payments but may therefore charge a commission. Now despite decades of rapidly growing numbers of retail investorS Participating in market gains and enjoying Idmore Product opportunities at lower cost, some of my colleagues suggest the markets are somehow rated stagainst retail investors. Like to hear how its ready. Dont reject investors receive dividendslike institutional investors, art retail investors entitled to best execution. Dont the value of retail investors shares and those of institutional investors both increase when the Stock Price goes up . My view the Secs Job is not more ke retail investing expensive or unpleasant or difficult. In america those investing their own money should be free to decide how to do so. Let me turn to Crypto Currency which together with Blocks Chain Technology is a very important and promising new technology. As you know crypto currencies are actively traded on many platforms. A really important question is whether a Crypto Currency is a security or regulatory purposes under how we or are some other test. Based on your public statements, itspretty clear you believe that some of our securities but others are not. So im frustrated by the lack of helpful sec public guidance explaining how to make thisdistinction. What makes him up insecurities while others are not securities. I understand the staff will privately provide Feedback And Analysis on sewhether a Crypto Currency is a security a not a security in other words how do you apply how we and the restaff to these new products . Fwhy wait to make the sec views known only when it swoops in with an Enforcement Action in some cases years after the product was launched. This is regulation by enforcement and its objectionable and im concerned its a spiteful domestic innovation so i hope we will get a better understanding of your views on these a number of other issues. There are many Things Ndabout which you and i agree and where he can work together to protect investors to ensure fair orderly efficient markets and facilitate Capital Formation. I hope we can work together on theseimportant parts of the secs mission. Thank you ranking Member And Today we will hear securities and and Exchange Commission very gensler. This is his first ioappearance here in this roleplease proceed. Good morning Chairman Brown, ranking Member Toomey and members of the committee. And on the honor to appear here before you for the first time as chair of the securities and Exchange Commission and i like to thank you all for your support and my confirmation this spring. I think chairman you may be the chairman i appeared before in this committee. Im teaching myself a little Bit But Chair damato may have been the first i was in this committee room. As is customary i should note my views are my own im not speaking on behalf of my fellow commissioners or staff. The us as ranking Member Toomey said his blaze blessed with the most sophisticated and innovative capital markets in the world. We represent 38 percent of the World Capital Market and thats when were only 23 percent of the world economy. They are competitive, efficient and transparent but we cant take our remarkable capital markets for granted. New technologies continue to change the face of finance for businesses and more retail investors than ever accessing our markets. Our countries and other countries are developing the competitive capital marketsas well. I know i provide greater detail in the written testimony but id like to flag three areas for now. First is Market Structure. Market structure is foundational to our mission to protect investors and facilitate Capital Formation and that which is in the middle, fair orderly and efficient markets. How do we do that . Is through Transparency And Competition so i asked them to take a look at the number of Market Structures, the Treasury Markets, the base of rall other income markets. The nontreasury fixed income markets, corporate bonds and municipals which are twice two and half times the lending banks or loans throughout our capital markets. Our equity markets in securities based swaps as l well and in each of these markets i think companies and investors alike benefit if we can increase competition , lower costs and bring more transactions out of the dark. Second is a rapid change in technology. Were living in a transformational time perhaps its transformational as the internet itself. I expect members might ask a question about crypto but the first thing i want to mention isartificial intelligence. Ai, predictive data Analytics Machine Learning are shaping and will continue to shape many parts of our economy and while these moments i believe can increase access, Increase Choice and lower costs, they also raise new questions about potential conflicts, biases in the data and even systemic risk. Now for the crypto because i know you are all keenly interested. We just dont have i believe in us Investor Protection in crypto finance,the issuance of these tokens, the training and letting. Frankly as i said before i think its more like the wild west. Ive asked that Sec Staff working with our fellow regulators in commodities Futures Trading and the treasury as well using our current authorities how can we best bringInvestor Protection to these markets. Im willing to work with this committee and other committees of congress if you take up any legislative initiatives and third , the issue of disclosure. Since the 1930s we had a basic bargain. Investors get to decide what risks they take. But congress said it should be based on full and fair disclosure to the issuers. Over the decades weve updated what those disclosures are todays investors are increasingly looking for consistent comparable and decision useful disclosures around climate risk insocalled human capital, Cyber Security and other areas so ive asked staff to develop proposals for the commission to consider these potential disclosures and yes, these public ls out in comment, rigorous economic analysis against what is it that investors want to see and how half the public comment. The beyond these policy areas the sec employees oversee 28,000 registered entities, 3700 brokerdealers, youve got the picture. A lot going on in our capital markets. 100 potential in Dollar Capital markets. Last month we authorized voluntary return to work. But weve been largely remote for 18 months now. This speaks to the dedication of the half. Lyi cannot complement them enough and while capital markets have grown the sec has not grown to meet the needs of 2020. So five years ago we were about four or five percent bigger so i just think that would be helpful to be a little bit wise and add to our staff. I hope that you can agree with me on that. Thank you, i look forwardto your questions. Thank you chair. Our company as we discussed privately and youve spoken publicly about how a company treats its employees matter. Sec can require companies to disclose that information but instead of crafting a rule that would provide information and data that could give insight, the last Sec Chair of the rule companies can interpret to require as much or more often as little information as they like. Companies tend to work as a Living Wage with ample paid leave. While subtracting out half their workforce to subcontract out after workforce to companies that pay lower wages with benefits. We know thats the Business Model for many companies. Why is it important to have disclosure standards consistent and comparable across companies . I think investing in a company, the human capital, the workforce is a key asset. When i started at goldman sachs we used to sell companies and when we sold we have a section in that private Operating Room about the employees. What theyre paid, how many are parttime, how many are fulltime. Where theyre located, retention and the light. Is more important in the 2020s because it is so critical to the valuations of the company. Will put this out if my fellow commissioners confirm will put it out to public comment and see what investors have to say and their feedback is going to guide us on any final rulemaking. ItS Pretty clear investors will want more information like you suggest in your golden days. We talked about how Wall Street has treated the markets as a game for decades, a game they always team to win in the incidence of everyone else including communities in Wyoming And Louisiana and Rhode Island Ohio andpennsylvania. Saks for Instance Drawing in companies that want to please Wall Street sometimes make promises they cant deliver on. Look at youngstown ohio, whats happening at lordstown motors whether or not the companies are only able to succeed and i hope it does. It seems clear there were outside investors looking at longterm s a investment in a community with a proud Manufacturing Heritage but as a way to make a quick buck with no followthrough. There will always be people like that but that doesnt mean we need to encourage risky financial mechanisms to encourage isolation over longterm investment. In a situation like that when these investments and pull up great promises communitieS Pay the price. What is the risk that the market is highlighted over the lastyear and what can we do about it . I think the specialpurpose Purpose Acquisition companies are blank check companies. The rest are two disclosure to investors. Id asked staff to serve up recommendations we can do as a commission but theres a lot of cost in these and secondly, we usually have a 2 yearfeuds. They usually try to go out and buy something and a lot of the institutional investors when that happens sell, its called a Redemption Right and retail investors are often left holding the adilution or the significant cost of the bankers and promoters. Were looking at greater disclosures and also looking at if theres inherent conflicts along the way and then again try to put thisout to notice and rulemaking. My last question, its been 11 years as we passed doddfrank and we seen executive compensation sore. Weve seen executives leave with huge bonuses after presiding over fraud and scamming customers. The phrase golden parachute has become a clichc is that commonplace. Why is it important to have strong rules that clawback incentivebased compensation when executives got that compensation by breaking rules and why should they disclose the relationship how important is it to disclose betweenexecutive and financial performance . Let me break in 2 things. For the sec is important to move forward because the congress with the president creating law and its a mandate we shall follow. I remember being a staffer sitting on the other side with senator sardines and i know thats how he felt in terms of the substance i think why congress addressed this and put it into law is that if theres a Material Misstatement or omission in the financials and those need to be restated, then the executives shouldnt benefit. And there was a certain number of years, a look back period, a Clawback Period that congress said you should give up the performancebased compensation if it was based upon faulty numbers. Thank you senator. Thanks Mister Chairman. German gensler, one area that appears to have nearly universal agreement is the benefit of a faster Settlement Cycle for equity securities. As you know market participants to beconfident in 80 1. My understanding is you support these efforts. I appreciate that and i would encourage the sec to move ahead as quickly as reasonably possible so that can proceed. I also think there is widespread support for fixing the Money Market Fund rule by removing the link between the 30 percent weekly average liquidity and the possibility of imposing fees. You and i have discussed this. I dont think theres a need for regulatory reforms that would reduce the liability of Money Market Funds as an investment but improving this regulation would reduce the risks that i think the regulatory regime imposes now. I am concerned about the sec not adequately fulfilling its Capital Formation mission. Last Years Appropriation Law instructed the sec to deliver two reports to congress at the end of june which would help benefit small public companies. These reports are now past due. I hope the sec will commit those reportS Promptly and you testified to the house we would have a report on Game Stop and Robin Hood but that report has not been produced. We got a week left in the summer. I do hope we willhasee it soon. Let me turn to Crypto Currency. And my time is limited so im going to try to do this as efficiently as i can. I think its, i know your position among other things is that not all crypto currencies are inherently secure. Thats true. They are a small number that art but i think that as Chair Clayton said when he was in front of congress i think very many of these facts and circumstances are investor contracts. Heres my concern. So some are and some art is basically what youre saying. The unconcerned the sec has not provided a definition for that and explain how it would apply the how we test think is the Court Standard for determining when something is an investmentcontract. Stable coins do not have an inherent expectation of profit. Theyre just linked to the dollar. You might use them in an attempt to make a profit but not the second order activity. It is your view that stable coins themselves secan be securities . I think senator they may well be securities. As thurgoodmarshall wrote in the recent opinion , in defining the scope of the market that is Congress Wish to regulate, recipe to the broadbrush and actually included about 35 different things inside the definition of a security. I got limited time so i acknowledge that. Heres my problem though. I think what you just said was that they may be. Or that some are securities. To me, stable coins doesnt meet the second wrong of the tax. That there has to be an expectation of profits from the investments. So it doesnt meet the highly test it looks to me like its not a security. Maybe youve got a good argument but why someare in some art. My point we need to have clarity onthis. You should publicly disclose this apparently not our private conversation where you workwith people proposing particular structures and you give them advice. I just think we ought to have that publicly and we certainly shouldnt be taking Enforcement Action against somebody without having first provided that clarity. Senator, this congress and could change the laws of the laws that we have right now have a very broad definition of security including a note, including an Investment Contract and the like. And my predecessor Chair Clayton and others heactually put out a lot of guidance with regard to the how we. I got pushed back a little bit on that. Its ybroad but its welldefined. Theres a specific litany of the instruments that constitute securities. You know this better than i do. Investment contract is one of them and theres a Court Decision that lays out the promise for what constitutes an Investment Contract. Imsaying as a layman who can read english , when i need those tests, stable coins dont seem to meet that estimate. Maybe im wrong but if i can interpret this i think others could do and some clarity, public Clarity Ithink would be helpful. I see the red light but i agree with you that some of these tokens have been deemed to be commodities. Many of them are securities. And that the supreme court has weighed in a number of times. You noted that how we test. I talked about the recent test in the 1990s as well. Has weighed in and i think theres a fair amount of clarity and the even found whiskey caskets and the courts agreed in the 1960s where investments and i think at the heart of our Securities Laws waS Protecting investors against fraud, they get to decide, they get to take the risk. Youll find im not negative or a minimalistabout crypto. I just think it would be best if its inside the Investor Protection regime that congress laid out. I seemy time is expired Mister Chairman. Senator reid from rhode island. Welcome Mister Chairman. Cyber security is one of the greatest rats that we face as a national Security Threat and also aneconomic threat. In 2018 the sec issued guidance with respect to public companies. Ive been trying over the last several years to enact legislation , senate 808 the Cyber Security disclosure act. Its very simple. It would require public companies to disclose whether they have a cyber expert on their board or whether they have other means to compensate. In fact we did precisely that when it came to financial experts. We do require a financial expert on the Audit Committee or explanation why they do not have one. You believe the framework in 808 would be appropriate for dealing with cyber . I thank you for highlighting that and in our conversations over the last couple of months ive asked staff to take two initiatives on cyber. One Company Disclosure and one with regard to fines. The investment funds and on the Company Disclosure side ive asked them to look closely at your bill and see whether we would not only potentially include that as a recommendation but also some other issues around alcohol cyber hygiene and then secondly incident treporting. When you do havean event or pay ransom where for instance , when one report and thats in the six or 7000 public companies and then separately were looking at something around funds so Cyber Security of the Investment Management people. Iq Mister Chairman and i would encourage you to pursue this and id very much like to see my legislation become law and your regulations become adopted. Thank you. Another issue that, and were all very happy about the increased retail participation in the Stock Market. There are a lot of people whove never owned stocks before that are buying stocks and for some the result is discount brokers offering uy discounts and aggressively marketing but theres another aspect of this and that is the payment for Order Flow Issue where a lot of these brokers have essentially Deals Highfrequency Trading firms in exchange for rebates that will send their orders to these firms and the question is is the owner of the security getting the best deal or is the intermediary getting alot of money . It looks like there is a disconnect, and inherent conflict of interest as you described recently. Are you trying to move forward with efforts to evaluate thiS Process of payment and see if its fair to the consumer . We are, i asked staff to take a look at this. Its been 16 years since we did a rewrite of Market Structure and the inherent atconflicts of payment and rebates on the stock exchanges both may make our markets less efficient and this is important for capitalformation and its important for the retail investors that all three senators have already raised. Retail investors may not be getting best execution even if they get a price improvement but there iS Price improvement versus outofstate measuring rods and if you measure against the wrong measurements to doesnt mean youre getting best execution so were looking out for retail investors. If anybody on this Committee Or Staff legally traded in the retail markets, theres like a 97 Percent Chance that it does not go to a transparent exchange. It goes to the dark markets for thewholesalers. So its harder to get best execution when youre not competing words were. So im like deeply Markets Person and believe in the competition of markets to bring those orders in competition. Just you mentioned in your opening remarks that one area youre looking at is the Treasury Markets and i think thats good because as you know march 2020 there was a free hecaesar of the market, the whole market seized up for a moment and the volatility in the Treasury Market is very much a danger to the entire economy. So i would ask that you continue to look very closely at the Treasury Markets. I dont, i know we try to learn lessons from march 2020 but i dont think we fully learn all the lessons at work incorporated them. I agree with you and its one place i hope that theres maybe even more bipartisanship. Im working closely with chair how the federal reserve closed with Secretary Yellen and her team to bring more resiliency, safer Treasury Markets but also more competitive that we might lower the cost for all of us. The taxpayers because we are the issuer. Thank you Mister Chairman. Mister kennedy is recognized. Mister chairman i read your editorial in the Wall Street Journal Today about the holding foreign companies accountableact. For what its worth i agree with most of it. The its a damn good bill by the way. If i may say so. I pswant to thank you. I think it helps us do our job both the sec and the department ofpublic company accounting oversight board. I appreciate that. I agree with you obviously. Theres a threeyear implementation period as you know. Foreign companies including our friends in china have three years to comply. The senateS Passed a bill reducing back to 2 years. Were having a little trouble getting the house to take it up. Would you you willing to contribute your considerable efforts to encouraging house to take it up . Senator ive already had some discussions and expressed some of the leadership over there that i se support that. Edwho pays corporate Income Taxes . Senator, its the corporation that pays the taxes of course then ultimately the owners of those corporations and the shareholders. Corporations is not a payer. Its a tax collector, isnt it . Im not here as an expert onthe tax code. Economists are generally in agreement that the corporation is not a payer, its a tax collector. The owners and the customers and the workers that Chairman Brown spoke so well eloquently about actually paid the tax dont they . Again, i never want to mince words but i think that the corporation of course is and their shareholders have more holding. Dont workerS Pay to weston mark. I think that its the cost of the corporation. Like all costs of the corporation, those costs compete with each other. What do the workerS Pay it, im just trying to, i donthave much time. Im workerS Pay individual Income Tax. WorkerS Pay socialsecurity tax. I am not sure i understand your testimony. Youre saying that the workers are not impacted at all. The corporate Income Tax . Im sorry, i thought you were asking a different question. All costs a company compete with each other whether its the real estate costs or any other. Are the workers impacted negatively by corporate Income Tax . Simple question. I understand it but i think its best as the headof the sec to leave. You dont want to make about taxes to congress. I understand why you dont want to answer. I dont mean anydisrespect to you. Ive followed your career. You have quite a career in public service. Youve made a lot of money on Wall Street. I respect that. I honor that. But as to the people and the companies that you regulate, as chairman of the sec, do you consider yourself to be there daddy . No. And why are youacting like . I tried to take the oath of office seriously that the sec is set up to promote Investor Protectionand facilitate Capital Formation and that which is in the middle. But why do you impose your personal preferences about cultural issues and social issues on companies . And therefore their customers and theirworkers . Like climate change and the second amendment . Im sure you have personal feelings about abortion. Do you have plans to implement or impose those values on companies . I want to thank you for the compliment Youve Givenme and i have the deepest respect for you to serve. I think i am not doing that. What ive been trying to do is say if investors want information about climate risk and it looks like tens of trillions of dollars of assets under management are asking we at the sec have a role to put something out to do the economic analysis and really see what investors are saying. Its really in that narrow set of chalk lines where operating. Thank you Mister Chairman. Senator test her from montana is recognized. I want to thank Chairman Gensler for being here. Ive got to say onE Thing quickly. Ive got a farm, my wife and i have a farm. We have a corporation. The corporation pays taxes and we dont. That corporation exists over thelast 30 years or so , has correctly us financially. So just a different perspective. I want to talk about citizens united decision which i believe is one of the worst decisions that ever come down from the supreme vecourt. Its ended up with literally hundreds of millions of dollars flowing out of our political system in an untransformed way. I dont think it helps with our democracy. That being said the fcc has the power to require companies to disclose corporate political spending. The money these companieS Put into campaigns may or may not be determined as being materially important but nonetheless that depends on what youre talking about. Its materially important for me in that campaign. Right now the current Appropriations Bill prevents the sec from doing anything about these contributions. Do you believe shareholders should have access to that Material Information about how companies who these shareholders own spend the money . Senator, thank you and as you noted there is the Appropriations Writer but putting that to the side similar to the other other issues around climate risk and human capital to the Nv Extent investors want to see that information and it looks like an increasing number of investors to. We see that each of the Shareholder Voting Period theres been conditions on this to the sec and so forth. I think the sec has a role similarly to put things out to Notice And Comment and see what the process brings. Thank you for the answer. I talked about this the Business Community before. I think we need to take a strong look at extreme Weather Events. As a farmer this year for example this is my wife and my 44th harvest. It was the plworst one ive are ever due to droughtand extreme weather conditions. If you take a look at the amount of money the american taxpayer iS Putting out for extreme Weather Events in this country it is billions and billions of dollars and it may even be trillions of dollars. I think it is irresponsible for us not to look at the impacts that climate has had on our lives and on our economy. Because this isnt going away and its getting worse. So as chairman of the sec, how do you view your work in considering the impacts of climate change as they pertain to your Role Asa Regulator . Again as i said to other senators are rule is to prescribe to commerce, 47,000 or so companies and the Investor Public and to bring consistent comparable disclosure where in investors want so in climate risk investors have been asking for it and hundreds of companies amongst the 500 largest i think its 80 percent disclosed tesomething but we can bring consistency, comparabilityand make the decision useful information. For the investor. For the investor and it would be regarding some of the physical risk you mentioned but also the Transition Risk over time. Senator reid talked to you about Cyber Security. Could you briefly in the next Minute Talk about the list of Cyber Security requirements that the sec is looking at implementing . I think im willing to meet with you or your staff to go through. I should have prefaced this by saying not unlike climate change, theseproblems continue to get worse. I couldnt agree with you more. Theres 2 lists. One is those activities, how are you managing your cyber because its a real risk, how are you managing it and what are your ill call cyber hygiene . Secondly is Incident Reporting. If you have a reach and youre paying ran somewhere and the like are you saying to the public whenthis occurs . Especially if you have private information of some companies have tens of millions, sometimes hundreds of millions of the american public confidential information then taken by the bad actor who has justreached the wall. Your work is going to be in the round of hygiene and recording the attacks. Thats correct. And the system may have in place. Incident reporting but any advice you have in your staff we would lookforward to having a good conversation. Onsenator lammas of wyoming is recognized. Thank you for joining us chairman. Its nice to see you. I have 2 questions, one is specific and the other very very general. So ill start with the specific area in your previous tenure as commodity Futures Trading commission you were anadvocate of providing no Action Relief. Two regulated financial entities within your jurisdiction. Now, over the last few years the sec has not provided no Action Relief to innovators in my opinionnearly enough. The sec has also provided 21 a Investing Investigatory reports onmatters of general interest under the Exchange Act. What would you say to innovators who are nervous about approaching the sec and how can you improve the use of no Action Relief and other public statements like 21 a report. Senator, i thank you for that question and you for our continuing dialogue about Innovation N. I do think risky the sec important authorities not only to do what you call no actionletters exempted authorities and life. So i have said, again whether its in the Crypto Currency space or in other innovative spaces, come in, talk to us and see if our rules for custody for instance which i know we talked about Work Transfer agents or something dont quite fit as they were written in a brickandmortar time and now were in a digital time. Lets talk about that if we need to go to congress, go to congress but maybe we can cobble together something. We did this in Money Markets in the 1970s. The people in the state of pennsylvania, Senator Toomey into the sec and saw authorities to do Money Markets and Thats Nota 5 trillion Asset Class. Theres room here to sort things out and try to figure it out. Keep things Investor Protection focused but just sort out the newinnovations. My adjunct question is a general question. Just about innovation. Do you support responsible innovation . Yes. I mean, its russ these lights in the room its brought us this ability to have a Hybrid Hearing with your fellow members. Innovation is what supports access, economic activity and gives so much of us a better opportunity in life given that , how do you write size the protections that are within your gambit. To innovation generally. Is an excellent question that im sure this committee grapples with decade after decade. I think its the core of the Policy Framework around ensuring that theres the public is not defrauded and somebodys not misleadingthem and lying to them. To ensure if you hold somebodys asset you dont miss use it, the physical asset and on trading platforms at the heart of our 1934 act is that competition basically drives the more efficient market and people dont manipulate that market. On the front run for instance in those markets. I think these basic tenants of antifraud, and Regulation But Procompetition lower the cost of capital for companies raising money and innovators and entrepreneurs even if theyre using for Instance Crypto currencies and the like but i think that inside that Policy Envelope that we have , is a great deal of opportunity. I think its at the heart of our economic access in the last 90 years that we have deeplymarketbased economy. I said we have the largest capital markets in the World A. Almost 70 percent greater than our economic share, 30 points versus 23 points. Theres a reason. And i think it helps our economy but its also because its regulated. Again, to broad manipulation. What gaps do you think exist and what additional regulatory authority would be useful. Both the Cfpb And Sdc specifically with regard to digital assets. I think that we have a great deal of authority. Theres more clarity that some members on thiscommittee , i mean i know were different on that but i think that in terms of the gaps, we have a great deal of clarity on i think whats the security but the gaps, the coordination amongst their agencies so for instance the coordination with the banking agencies on stable value points that Senator Toomey raised earlier. The coordination with my Sibling Agency that i was honored to chair the Trading Commission on the tokens themselves and the platforms because to Theextent Something is acommodity even the cfc doesnt have regulatory authority. They have Enforcement Authority , a wonderful piece that dawn wrote recently that i thought was worth reading but working together with the cftc and how to coordinate and then theres in the eye would say Infrastructure Side things around transfer agents, custody and the like that i think we can work with congress to help clarify. Thank you very much y. Senator warner from virginia is recognized. You for your comments about in your opening comments about my legislation , the deals worth disclosure around the workforce. Ti want to come to that topic but quickly Chair Gensler, respond to a couple of my colleagues questions, one i want to agree with it or read. ThiS Payment for Order Flow, weve been talking about close to a decade. I think there would be broad bipartisan agreement about that. On Incident Reporting in termsof cyber , i think the Intelligence Committee probably has as much visibility in that space as anyone anywhere. We have virtually every member of the Intelligence Committee together on a bipartisan mandatory Incident Reporting bill for critical infrastructure. For federal contractors. Were trying to work through details and my hope is we can work with you. If youre going to have a mandatory Reporting Requirement got to have a penalty or its toothless but weve got to work with industry to make that happen. Its only going to get worse. And you know, as someone who shares some of your concerns wo about crypto i will have knowledge you only put one wild in front of west and as opposed to 2 wilds in front of west. As somebody who did pretty well financially, im all in what we do need some guidance. We do need some direction. This is i would go to the 2 wilds in terms of description of this area as good as some of the innovation is. Some of thE Things i see from the Intel Side Scare the dickens out of me. We need to figure out a way to join the caucus because weve got to find a way to come together on this and the area of innovation but also an area where i can assure you i will give the industry one credit here. When we were going through e this definitional process , i heard more newspapers, newsletters, entities, ive never seen a group that got as many combinations as the Crypto World already has. Let me get to the topic i wanted to address which is human capital investment. Weve all acknowledged that every ceo says my biggest asset walks out the door each day, human capital yet we dont have any reporting. I agree with the chairman. When companies offload their workers as contractors, theyre really not putting their Money Wheretheir Mouth is. And i think the Workforce Investment Disclosure act which packs the house i hope will be part of the guidance of what activities you take. Weve got to make sure we have ways as employers or investors want to know employee retention. They want to know what kind of skills and training is taking place. I hope you will also go beyond workforce and look at the whole realm of psg reporting. Investors want this. If there are no standards at thiS Point , ini think we need to move to mandatory acrosstheboard but we need some more look there and i want to make sure i get a question in here and this is a topic you and i have talked about in the past. Ive got other legislation that would create the equivalent of an R And D Tax Credit which was a radical notion as you know within the Accounting Worldin the 1970s and early 80s. To create an R And D Tax Credit Type Equivalent for companiesthat invest in upscaling low and moderate paid workers. I think creating an Asset Class around human capital makes sense or at least is worthy of a discussion. And i hope you can pick any of those items along with the chair and coming back but i hope youll focus on the workforce. I look forward to working further with your staff. Its a way to subvert our current moneylaundering laws and were all trying to protect them. I want to be respectful. I used 1 wild and i look forward to your great state of wyoming but on the workforce, on the workforce just to say we have looked closely at your bill and other committee members. Its like ultimately what investors tell us during the Notice And Comment period. When we put something out, hopefully you will weigh in also and all the members will weigh in and say to investors want this information . Ive always found if youre going to buy a company or sell a company when i was doing that goldman sachs if people want to have a thorough review of that workforce and its ups and downs. Its an asset and its a critical asset. I couldnt agree with you more on that. Senator tillis of North Carolina is recognized. Chair gensler, thank you for being here. Are you familiar with rule 17 one under the act of 1940 and asection can be of the securities Exchange Act of 1934 . Generally yes. For Others Edification 17 j one under the act of 1940 and section 10 b of the securities Exchange Act of 1934 are the two provisions used by the sec combined with judicial precedent to prosecute individuals or the practice of front running. This motivational front running includes any efforts to do so including the information obtained through payment for Order Flow. Is the practice of front running already illegal . The practice of frontrunning is again the rules that you said but also a number of theexchanges. Its really to protect the Io Public that if i put an order in that i can get that inside the market and somebodys not going to take that and use it in front of me. I know youve been critical of the Order Flow contending it prevents conflicts of interest for brokerdealers and retail customers are harmed through inferior execution policy. You still stand bythat . I think we need to take a look at this whole Market Structure because many orders are not competing with other orders. If you place an order might be bought by one party and its been publicly disclosed. Theres one wholesaler that has 15 percent of their Market Share in the retail market. So its really about are the orders competing with other orders . Im pro competition and im not sure thiS Payment Order Flow system is the best competitive landscape. Is it accurate to say theres another card designs into the system by retail brokers to secure potential conflict of interest . In other words this means the execution partners will pay the same Rate And Act within the same system essentially putting all execution partners in competition with one another on Execution Quality and not payment for Order Flow. I think the challenge is if a party is buying all the Order Flow or both of the Order Flow and the order by Order Competition doesnt exist so the retail public doesnt benefit from the competition. When i was growing up you had competition, it wasnt modern Technology But Petition on the floor of the Doc Exchange and brokers that scream and yell at each other about what they weregoing to pay. Now if one is there that could have diminished competition in themarketplace. Using retail brokers in should route orders to the Market Center where they have the highest likelihood of obtaining the most favorable execution for their customers and why or why not . Ive asked staff to consider the economic analysis and think about the whole Market Structure. How we can lower the cast of Capital Formation and lower returns for the institutional Public And Weve not updated in 16 years that Market Structures so really i think its almost like a sweater where everything is knitted together and i was quoted recent about if something was on the table. Yo and by doing the behavioralpr to trade and sending the senator a different prompt than Warner Or Warren and that sort of different reality marketed to it. Only respectful time but if we go down the path and states a client that have an educational lottery in maryland coming up a similar lottery that if we go to the path, and we look at possible restrictions or eliminating game of negation the indians Basement Sector why would we apply that same logic to any publicly game if id ventures. I think that what i am interested in learning we just put out a public comment and requested, even a rule, is to liask that could you help us, te public comment that if a platform is maximizing the verevenues by marketing to eachf the senators in this room differently, could there be a conflict rather than considering what is best for each of you and your families for your investment needs. So it is these platforms, they are now optimizing based upon our b mobile apps and based upon how we drive our causing they are maximizing based upon all of this data and that brings us greater innovation and supplies to Innovation And Access and he can be a cost to lower cost. Were just raising his conflict as well if they are trying to market to everybody differently. Thank you. The gentleman from new jersey is recognized for five minuteS Pretty. As we all know, the Asset Management of Investment Consulting Industry is overwhelmingly white and male. We also know study after study have shown a greater diversity great dented leads to greater profitability and profitability. So in effortt to improve performance of benefit everyday investors, the Asset Management advisory committee, they unanimously recommended that the fcc take several tangibleni concrete actions to improve diversity in the industry of the way that is aligned with the Owner Diversity and inclusion goals and its mandates to protect investors and promote fair and open markets. Have you had the opportunity to read the full advisory committee report. Unfamiliar with it pretty. Have you been briefeddi by Te Office of the advisory committees and Subcommittee Leadership pretty. I have met with the Leadership Committee pretty. And have they advise you of it pretty. YeS Pretty. These recommendations, their civil and straightforward and for example one is to require enhanced disclosure requirements engender information of adversity and some firms already report this information and others to establish the procedure to allow the fcc wintering receives reports of rdiscriminatory practices to report them best according to investigate the Complaint And None of this iS Part and frequently difficult though controversial as evidenced by the unanimous vote of the advisory committee said given that report, can you commit to bringing these items before the commission for a vote before the end of the year so that we can bring Transparency And Diversity to the industry and ultimately deliver better market outcomes for the investorS Pretty. Avesta staff to look closely not only at these recommendations but also other recommendations with Regard Tooo issuers. And on the Investment Management side and make recommendations up to the commission and with a full docket, i dont want to say what time that will be. After the end of this hearing. I get similar answers from every chair and the problem is you never end up with any concrete steps to creating the S Diversity that everybody claims that they support. So im tired of hearing about that we are going to study it get more recommendations. I want to know, was our pathway to action. So sir, we are doing more than just studying, massive stuffed recommendations as weve talked about earlier about human capitol. Thatss a 7000 issues and that includeS Diversity. And it includes workforce statistics Senator Warner night discussed earlierne as well avea bring that up in front of the Member Commission is a lot to take on to the economic analysis can be very investor focused these we have b to live within that line visit. And what investors make their decisions on credit. We will be following up with you. Ive been following up on this without satisfaction to be honest registered the companies that make public pledges expect their company to act in a manner consistent with thiS Policy pretty. I think its a bedrock Securities Law and present resident called the first act in front of congress on the 33 act and the truth in Securities Law and so youre talking about that if you make a pledge to your shareholders, Stability Factory or any pledge, that youre not default the public. The honest rendition and of the disclosures youre making. Many companies made public pledges to stop donating money to the 47 members of congress the certification of the biden victory. And since many of these companies resumed their political donations in direct contradiction to their public pledges so dont believe necessarily that they have followed what they say so therefore do shareholders the right to know within the companyS Political donations contradict their public commitment and whether those comedies make or may be supporting outcomes which may pose a Material Risk to the companys bottom line. If you say materialistic and there has been a Material Misstatement to the public, thats at the center of our Securities Laws. I look forward to seeing some portion. Of that and finally, e to public health concerns in novemberue of 2020, providing member firms to complete Branch Office Inspection remotely. Within the Calendar Year of 2021. What is your assessment of the quality of the remote inspection have you think thes . Regulators sacrifice any of the site by allowing these remote inspections and because were still facing the delta. Height, the fcc considering textending the remote inspectin giving the public health. Sooner we are and we as a nation are going through the most challenging time or at least in my life. Healthwise and economically related to that. What i havee conversations with the head of examination we have about 1200 Person Examination Unit and i as a question prayedy what we lose will regain being remote. Layer tradeoffs, we gain people are commuting as much pretty people of the better Worklife Balance what we lose is you are not sitting in a Room Eyeball to eyeball talking somebody trying to inspect fund our company and so forth. Yes we are looking at extending this because of the realities of thiS Pandemic we are in right. Sooner scott is recognized pretty. Thank you for pulling this imported hearing today. I think the comments earlier on about the Market Accessibility to allim americans seem like we been hitting in the right direction for some quite some time over the last ten years or so. Some concern i have is seen from a position for me so far is seem to me actually jeopardizes that path to the opportunity for the average american. Back to a Business Plan is in the insurance and financial services that would tell my clients often times, theres only three ways to treat real estate, the american dream, hoe ownership, no question in my mind the fact is that you build equity in your home and your actually building equity in the station ensure share of the Market Dream is so powerful and important that we focus on and secondly, shes very think more of the Market Dream is still having a business and you have the business grow and because more profitable and network the uc accumulating is important to the Market Dream and then finally having Equity Decision in the Market Place on that would make it more affordable for the average person to invest the marketplace to have a chance to literally experience the american dream. And to allow this nation financially, to be exact 32 years ago, giving idea for the percentage of american households that work investing in the Stock Market. We grown particularly thirtytwo years ago do you know exactly what waS Pretty. Lower than today about ten points lower pretty. Good Answer Self 32 percent of american households 32 years ago have access to one of the three streams at least to creating wealth in the station much of the reason i was they had limited access because the visa make a trade or so darned high and imagine today the average Stock Prices and run hundred 90 the S P 500. And if you invested in a stock in the 70s and 80s, stock would have to have increased 21309 before you made a penny because youre using using that increase to pay the transactional Cost And Today at zero. So literally you have a chance to invest in marketbased because we cant conclude of those congressional costs so you said Today Number Household people to invest market, is 53 percent are invested in the market, life because of getting involved in the market, the price plummeted. So when we do things like banning for payment for overflow, sent shivers down the spineS People have waited for this day to come, 15 years ago it was 15 or 20 we traded today is nothing, literally youve access tote a market rural amera living or South Carolina or the city of chicago for the first time. You have chance to be the marketplace. Under the biden administration that can vanish away quickly thatS Painful as a kid who grew up in poverty who now has access to the market and thinking from the Household Whoho make 75000s in the market. Supportable. But the customer to make their own decisions on their investments not have a regime helping protect americans because i Cant Figure it outbe for themselves. Im concerned about that. My question for you is what is your plan to ensure that existing system potential for innovation within the system, continuous benefits from that we dont see yourself going backwards. Lisa higher trade because we americans were able to invest your hard earned money in the way they see fit pretty. Tender i think how much my father saved and he was like you he would agree on this trip was a estate small business. As good as he tosses anyone she did he would say, we think of the stock and he would try to buy 50 shares of something i couldnt agree with you more in terms of the retail vesting, thank you so positivE Thing in america printed i was when i was a kid is welltrained and the cost and what im saying, technology is different down and competition is driven down the cost of as you said, investing. But theres still a cost for overflow even if it is a couple pennies out as a cost so, its buried behind the scenes and what i raised was to economist is can we do better now more competition that orders compete with orders rather than one Wholesaler Spying Half of the retail flow in america. A friend who better with great capitol markets that we have so think were more outlined in its about trying to drive it down below coastow printed. Chair amount secured. A bunch off others amazing thank you had Ang Chance to own some D Part of an investment they raised five kidS Pretty. In thiS Part of the Market Dream. In the notion that the Market Dream is accessible for all americans and the administration cards on the puzzle they can make it worse for the average person in the nation, then we should pause and take get Help Market works can we make it better. Center warren prayed foriz massachusetts is recognized pretty. Thank you. We help we hear a lot about inclusion, away from people dont have a lot of money to be able to manage it or mess it. A bank is in a pretty lousy job and financial inclusion so i want to test out with you whether or not crisco is an improvement, last tuesday the Crystal Market tanked once again. N. Ag the prices at thiS Point in either each felt by about 10 percent while a bunch of other tokens failed by as much as a third. And so it for a matter of hours, 400 billion is market valued just gone. Meanwhile, several the biggest crystal exchanges advantages which kept h the customers from making withdrawals. Our trade. So has that effect people dont have the money to lose. The same as when he took a Glass Slipper my savings and went on Crypto Exchange Point based at about 100 worth and then i woke up early into the morning and i looked like he was beginning to take in about a sell right now. And what i try to sell point based, the exchange was down. So, was there anything that i could do to give my money out. Not in a federal agency. These have not yet registered with us. Even though they have dozens of tokens maybe security. That sounds risky to me but lets say that instead of buying this ongoing base last monday. Decided to to buy a cool token, lets call it new point. And being hyped on twitter. Its only available on decentralized crypto exchange. Said wyatt, a fancy, about 20 bucks. Unto the crypto minors who processed the transaction. I figured that was okay. Its because Twitter Toby new points would make me a lot of money. Celesta asked about this one. So on tuesday, what i wanted to sell new coin and get back to the dollars, get to them fast, exchange had not shut down. But remember, i do pay 20 on monday to get into the decentralizedda finance. So much what i had to pay to get out of these two semi coins wouldve i had to have paid a 20dollar fee or if i had to take even more. I real because it would be in the User Agreement by the way, the cost, itself will because decentralized name only. Because of something thatly youe doing i dont know what the fees would be. What we do know some of the fees. The swap between two crypto tokens on ovarian network was more than 500. Obviously way more than the hundred dollars that i was trying to say in the first place of the question that i have was in the face of these high unpredictable fees, small investors can easily get jammed and wiped out entirely. Chair, the advocates of the crypto markets are all about financial inclusion. But the people most economically vulnerable are the ones who most likelyve to have to withdraw the monies the fastest when the market drops. Does this sound like a path to financial inclusion to you pretty. Is highly speculative and it does not sound like the path that you mentioned. Theres a whole problems with crypto, unreliable tax scams devastating, impact. The high unpredictable fees can esmake Crypto Training dangerous for people who are not rich and regulators need to step up to address the regulatory gaps and ensure Theap Burke Building inclusive financial system that we need and chair, and the fcc i ask you to take a leading role in getting this done and thank you. Thank you. In the senator for montana is recognized. Thank you and thank you all for being here today. I wanted to join my colleague by expressing my concern with the fccS Posture towards Crypto Currency in longchain and the innovationoc and as i said befo, i believe a liner regulatory touch approaches what is called and this was causes to be here and of regulating the emerging industry could drive the Job Innovation overseas in the global race. And we all should agree on would be a a very bad outcome. In america long led the World Innovation and we must do our very best to ensure conditions continue to exist for america to lead in the space. Especially the Crypto Sector. In chair, Gary Gensler you have asked the crypto companies to come in and speak with you however many of these companies that have come to speak with you as soon after found themselves a the target of Enforcement Actions or even legal threats. The question is, what is the process of the S P for the fcc to provide guidance and what might come to expect from talking directly with you. I think you and i would say that i think the way we innovate is within public Policy Frameworks. We have companies to come in and talk to us and if they are training on lending and security. If theres a registration regime. And company sincere the 1930s, they go on for five years have found ways to innovate or register or seek an exemption or seek and no action letter. And to work to ensure the registered but theres a public Policy Framework around that. Two drawing lines to the public statements that actually going through process. You have to provide clarity to the market participants as opposed to really telling the marketplace to something big speeches. Vague remarks and interviews so with all respect, i think that actually the fcc has the congresses that granted ends very broad definition of security and includes Investment Contract and 35 other things, my predecessorS Put out. And guidance in this area as well. And so i think to come in and talk to us, not you senator but you know, the entrepreneur and that also facilitates the Capitol Formation. In this field that i studied for three and half years, have a belief that this is been a catalyst for change. But i think of it is a space outside of the public Policy Framework for any money on right and Investor Protections, some going to allr persist pretty. Shifter stockpot china. You have made it clear that you will be increasing oversight attorneys trading in the u. S. Markets. However, it is not clear to me that the fcc is doing enough as a relates to the oversight attorneyS Brokerdealers. The substantial u. S. Customer bases and their growing rapidly. My question is, what is the doing to ensure that americans are not unknowingly having financial information and personal information transferred to the chinese government. Center if i could ask if we could meet at 101 because i ecwould understand more about yr concerns here because i think its an important issue and im sure americans are protected the personal Information And Privacy iS Protected just as if they were working for the u. S. Firm. Having spent a lot of years in the cloud computing world, it is a real threat with this Data Preside is in the access the chinese government would have to this very sensitive and important personal information. On a shift to the fcc for a moment. You previously acknowledged the needed toed work together on the crypto market. At the same time he stated that many tokens may be unregistered securities. What role do you see the Fcc Play with Perspective Oversight of the Crypto Sector and in your capacity as the chaiR And Do you have conversations on this Topic Today pretty. Yes ive had really good conversations. I was honored to share with the agency as well. I think the world of the agency and i think we each have perspective jurisdictions, they have an Enforcement Authority on commodities. But a regulatory authority. When a regulatory but we can write rules and register companies that are trading of platforms and the like. A bit on platforms, maybe some commodities some of the chairman has been Talk Mess how can we partner up using our existing authorities to best protect the investors. And thank you for your time chair Gary Gensler. I look forward to follow up with attorney issue. Joining us remotely from nevada. Thank you, and chair Gary Gensler, thank you for joining us and let me come back to the conversation with my colleagues about the m Crypto Currency in E Thing that i just want to verify is the efficiently equipped regulation or the funding to appropriately ensure compliance and keep pace in the Crypto Currency market. Do you believe so if you dont, then what should we be doing the committee what wee need to knoww to help people. Think youre right so think of finding wise, we could use a lot more people. I just need to be frank with you, their 6000 project and while some of those are commodities, many of them are securities under the law. Many of the platforms are so we could use more funding and in terms of legislation, i think that what i have said earlier in this hearing is the coordination between the market regulators, is strong and Chair Benham and i have been talking about how do you do this and there may bE Things that congress can weigh in and help on the coordination and also unstable coins, the ordination with the banking regulators and there are somE Things frankly a bit in the wee disc about the transfer and the custody and the like. Thank you and anything that i look forward to working with you on that in whatever we can do here in the committee to support how we address and look at the Crypto Currency, you know that you have support for me to me talk a little bit about unification. When we were here in march, i raise concerns about behavioral prompts in it and i said that it encouraged training could be detrimental to some retaile investors so i know that youre looking at this Ranking Center mentioned that you doing a report sometime this Summer And Puttingoi report on out if i remember correctly can you talk about where you are and injure concerned with it and how it impacts the investors. Things, one Game Stop, we are pretty close, is in front of my fellow commissioners i assume it will be out shortly. And the quote gamification, we have asked the public to request for comment to give us feedback i think the issues there is that ghwe are living through a transformational in american were saying this and every bit of our society and so forth but if netflix figures out that im a different guy of rome come sort of guy, and it, yes, i am, i would like to see if they have it for now but this is about peoples investing future. Its what ive asked and i think the Core Question is the data analytics are mesmerizing the platforms revenues and optimizing revenues and optimizing for Data Collection and that may be in conflict with maximizing for the Users Investment returns and how do we square that. And lastly if i could apologize respectfully, it is not actually free on these apps, it might be zero commission youre still paying the payment underneath the hood. And it is still there in my real concern is about whether the competitiont is there, whether t is sufficient order by Order Competition. Think you and i appreciate that clarification. Let me just add, and i know the senator asked about this or talk about this. We have seen from the west anD Particulate nevada and california, for the worst wildfires weve ever seen. Because of the extreme weather pretty is impacting the Air Quality as well that we breathe and so i know there was this discussion earlier about why should the fcc be concerned about the climate Crisis And Risk but would you talk a little bit about this and i understand you said investors should understand what is under the hood of green or sustainable son, what do you mean by that. Thank you for asking that, with a separate Rule Docket brian asked investigations from the staff rated asset managers that are marking themselves as green or sustainable or carbon free and just as we walk into a Grocery Store, i might be fatfree, what is been on the marketing. And i think that actually probably will unite the senators in this committee, what is behind the marketing read in the name and so staff will make recommendations but i hope that we will say something there has to be some metrics standing behind that if youre marketing yourself so to speak as carbon free. And i would assume they are marketing it that way because maybe some investors are looking for that is that correct. I think that investors increasingly are interested in investors get to decide in the basic marketing of the capitol margins in investors get to decide they also get to decide how they make their decisions. And all the fcc is trying to respond to the investors to say here is how we can help bring Consistency And Comparability in some decision useful information. Thank you and thank you for joining us. The next person is recognized. Thank you for your testimony. Americas capitol markets are some of the most robust and transparent markets in the world but not everyone has equal access to them. In georgia people of Color Account for nearly half of the total Georgia Population while only about 23 percent of georgia startups are minority owned. Womenowned businesses are also lacking, only 38 percent of business owners in the state according to a study by foundation, black entrepreneurs are three times as likely as white entrepreneurs to report that their businesseS Profitability is negatively impacted by lack of access to capitol. And almost twice as likely to face the cost of capitol. The sorting of businesseS Profitability. All of us have a stake in the ability of entrepreneurs to pursue the american dream to create jobs. Chairman Gary Gensler what initiatives is the Fcc Bleeding right now to increase diversity within the venture capitol industry. We have a number of Tools Int the toolkit and this question came up earlier from Senate Menendez as well. Wead had an effort and ive askd the staff, what can we do with regard to disclosure regimes in the Investment Management side. The more clear disclosure regimes in the company site, Issuer Side and the Investment Management side but there is something the weeds that we are taking a look at more closely. What tools will we have to increase diversity. A disclosure based regime and disclosing to decide if the decisionmakers, the investors about those funds for the companies they invest with and ensuring the disclosure is what those investors want so sort of like, its going to come from the investors in state potential clients and we talked about this earlier. And on the Issuer Side in the Investment Management side, the investors wish to make their decisions. So the role you play in that kind of Transparency And Disclosure is as i understand that, let me ask it in a different way. What is the fcc doing in your view, what could the fcc do to help encourage Investor Capitol funds to look outside of their traditional geographical areas for Investment Opportunity and in other areas of the country. Like small cities like agusta and others, i think a lot of this happens because without intentionally doing something else, there is a way in which the way things that are traditionally done has its own momentum. No no, couldnt agree with you more and i think that it might sound like its back to basics but fundamentally, it isn the middle part of our mission, making sure the markets are efficient. And competitive and even the private funded space will be a project to promote competition in the space so that the person raising money in georgia or elsewhere and ethnic racial background of the cost of them raising money is lower as well so the small Business Entrepreneur raising money. It is not just to the friends and family but they can go to a Venture Capitalist as you say and raise money efficiently. Im going to shift to another topic is vitally important and i think we all agree that investors have confidence in the financial regulators are keeping their Protection Compromise so that are markets work for every one of the pandemic is retained having our nations significant strains and every aspect of americans including hardworking families in georgia and probably country in georgia, they face layoffs, small businesses currently closing having costly to worry about health of their families and bloodlines and through all of this, they saw an opportunity to break particularly are praying on them and commit fraud whether this is investing cummings falsely claiming to be producing medical reports or businesses using the pandemic to disguise their own fraudulent deals, what tools or resources do you believe congress can further Provider Agency with the Support And Work to fight fraud and protect the retail investors. I think you for question, the two areas, one is frankly funding, we shrunk during the prior administration by about 5 percent and we done a little bit since this new and ministration of where you are about 4 percent Data Headcount and yet retail investing is up, when the middle of the pendant, we have the challenges of doing things remotely. So at a minimum just to go back to where we were in 2016, i think we actually should get further than that. And then two, in some areas we talked about the Crypto Currency, is really just to help bring people into the Investor Protection, because right now there are many individuals in this country that have already been hurt in their unfortunately going to be more spells so to speak, an old Grocery Store term but, this crypto area, trying to stay outside and Investor Protection. Thank you so much chairman and we certainly want growth in the economy to continue to drive and myth first question i guesss about equity. In the other about integrity. In both of thesE Things are worth informing for everybody. It. Thankor you. Welcome in size to be with you virtually. Ive a question to start with. Having a safe and secure retirement is a crucial goal for so many american families and heres my specific question. Registered annuities have become a rapidly growing Savings Option for many americans in the first quarter of 202021 alone, more than 9. 2 billion of these annuities were sold. So heres the problem. The fcc does not have a Registration Form for these products. And this might seem thatot big deal but it is a big problem in kind of a classic bureaucratic segment because what amazes a big portions of the year, new products can be registered at all and when they are registered, recording costs are higher in the Disclosure Form and a bunch of information is actually been useful toes the investors as they are trying to find the information that really matters. I would like to introduce a Bipartisanll Belt to fix thiS Problem and im really glad that the Consumer Federation of america and leading Investor Organization supporting my bill. But as i think you know, the reality is that we dont need legislation to fix thiS Problem and we dont need congressional action. The fcc has the authority to renew Registration Form itself and infect the think the fcc has literally dozens of products specific Registration Forms in place. My question to you chair Gary Gensler is can you commit to me today to issue a new Registration Form registered invest annuitieS Pretty. Senator, i know that we have different regimes for Index Point annuities and so i look forward to working with you and your staff in learning more just five months into the job, have to admit that i dont know all of the details of the other annuities but i look forward to working with you and your staff about the potential doing as you say, another form because i think we do have different forms for index late annuities. Thank you and this is a very specific Thing And Something that i think we could solve relatively easily and i hope your agency will be releasing your regulatory agenda seven and i would love to see this issue on that regulatory agenda. Again i look forward to meeting with you and getting her staff together and i understand, i think her H Staff have already chatted but understand it better. We will follow up and i look forward to working with you on this. Let me ask you another question, we often have conversations in this committee about Disclosure Risk Andnd i think it were in general agreement that the market works better whenrd investors have clear and trusted and transparent information about the risks to the businesses and that information iS Provided in a systematic way so the investors can compare risk across organizations. Some of my colleagues on this committee take a completely different approach when it comes to Risk Disclosure for climate change. This just does not make any sense to me when as we as the senator pointed out, we are seeing billions and billions of dollars in cost or extreme Weather Events caused by climate change and is not only a public sectornt because, it also privae Enterprise Cost as well. So right now, when companies release climate related information if they release any and all, is not in a systematic format with any specific guidelines and thank you so a problem for investors and as you say, the fcc should be protecting the investors is also a problem for regulators as the Chair Powell has laid out and talked about to this committee earlier this year so i want to commend the work that you and the commissioner have done so far on climate risk is closure. Im glad youre working on how best to address thiS Problem and i understand youre reviewing those comments now so me just ask you a question about this. What you think that climate disclosure is an important priority for investors Gary Gensler. While think investors have spoken loudly to your question and companies right now are making disclosures but not just consistent disclosures. But why is important is there could be physical risks as we have seen whether its been funding our Weather Event printed also is a Transition Risk, transitioning to a new economy as we globally address this. But investors are really demanding it and role of the fcc might have is to help bring some Consistency And Comparability to all of this. Thank you for your work on this and i dont see this as a social issue i see it is a systemic risk that investors face because of climate change it is important that we all understand it including investors and thank you. Senator from maryland is next pretty. Thank you mr. Chairman, it is great to see you. We start by thanking you for your efforts to move forward on the rulemaking to be 51 plan as Senator And Fisher and i had bipartisan Legislation Wouldve directed the fcc to look at this because you know well that public confidence in the markets requires confidence that there isbe not Insider Training and training and i look forward to your rule making in that regard. I just want to try to cover a couple of other point. One involves the whistleblower provisions as you know we have laws designed to encourage individuals to surface cases of Fraud And Beginning in 2010, maryland, john mcpherson, a former forensic accountant gave the fcc with the fcc described as extraordinary and continuing assistance. They help the agency shut down 1. 4 billion Investment Scam by company called life partners holding inc. And despite his substantial persistence, mr. Mcpherson didng not receive the Whistleblower Award because the company went bankrupt as result the fcc did not collect its fine. The case did require over billion dollars for investors and you know in bankruptcy, all the lawyers and accountants conveyed. But the person who was the most instrumental in bringing this case to light and exposing the fraud, do not receive his award. Someone work with you and in the fcc to see if you can through your existing authorities make sure that he gets would normally be expected in this case or if the change of laws require to work with us because thank you would agree that we do want to continue to incentivize people to bring these cases to light. Centerou i agree wholeheartedly. Ivi do the work that Senator Grassley did to bring this whistleblower regime in a place in the Fcc Today has had a reallywh robust program and its up the american public in the investorS Public. But i look forward to working with your office on this matter. This kind of situation obviously mayay discourage peope from coming forward at great risk potentially to themselves if at the end of the day pretty. I dont know whether it will needed change in law rather than something in our current authority rated. That is what worries going there with your team and look forward to continue to do that and so turning to in july following the collapse of Thek Share prices of dd, i urged the fcc to thoroughly investigate the incident to see if investors were intentionally misled by the public disclosures and byo you know, it came shortly after that happened the Share Price so you know you cant disclose whether theres an ongoing investigation. And i commend you for the statements you have made generally about reviewing listings of chinese companies on u. S. Exchanges. Can you expand on that and i heard the Senator Kennedy also references. Your in the Wall Street journal the implementation of the legislation and that the scene i holding companies responsible to ensure we are allowed to see the books for an independent entity and to protect americans shareholders and investorS Prettyit can you talk about thoe pieces and the need to better protect americans rated. So theres about 270 chinese related companies in our capitol markets between one half and 2 trillion to give you a sense of Scope And Scale that many of these actually the u. S. Did not invest directly, see in china, they can prohibit foreign ownership in the Internet And Telecom in the fields. Theres been a form of setting up and shell company and came in and it raises money in the u. S. And has some operating arrangements with a chinese comedy which by the way, usually stallone 100 percent in china by friends and family and so forth. I sort of got to them and you all have holding those and someone is after 19 years after that oxley in the chair is sitting this year this Room Erpretty past maryland friend, a mentor shared mentor. So bipartisan bill waS Passed and 50 plus jurisdictions have complied and to have not read China And Hong kong so congressman bipartisan bases again said, lets address that and invest for years and weve had discussions directly with the chinese authorities and the clock is ticking but i also think in the meantime, and in the meantime we should enhance the disclosures of the existing companies, these 200 less companies as to the political risk and the regulatory risk and the real financials between china and the cayman islands. Thank you. Thank you, and the next senator is joining us from his office. Thank you mr. Chairman and thank you chair Gary Gensler for joining us and that Covid19 Pandemic haS Prevented it the most immediate and ongoing threats to the u. S. Economy and their global economy over the last two years but beyond the risk, and the Pandemic German Gary Gensler as a Voting Member of the financial Oversight Council in your capacity as the chair, can you please provide to this committee your assessment of the greatest systemic risk in financial stability in the united states. We work together at the financial facility Oversight Council and reported we s are st of in the midst of that right now. I think that systemic risk issues is something that can spill over into the whole Marketplace Or Capitol markets weathered the storm of thiS Pandemic and actually whether i think better than i would have because of the reforms of Dodd Frank and a greater capitol of the system. Theyre still risking the system whether its in the commercial real estate area, the reach for the yields that is secondary to mentioning a reach revealed that reit many investors not just retail investors but investors more broadly you reaching for yield. And we in our country are also transitioning off of something grainy systemic risk in the transition away from and to another set of rights. I thank you so being managed well but it still presents some risk in the transition because it is two 300,000 in essence on top of that but i say that the biggest risk is the Healthcare Risk itself. In the Healthcare Risk and how that is managed as a nation in the economic risk associated with that isca probably the biggest risks. You have a threepart to have maintaining fair and efficient formation and can you please inform the committee of how you view, change is impacting that Threepart Mission and the actions you will take in order to protect investors and maintain fair orderly and efficient markets and Capitol Formation given the negative impacts from the climate change. I think we areer taking up to initiatives and i think that both of them relate to all thre of the pieces and i think that investors increasingly want to know the t climate risk of the company i think by bringing consistent comparable information and standards into this, and the companies themselves will benefit in the companies will benefit and say that we can now compete efficiently in the capitol markets by presenting this set of standards around the Greenhouse Gas emissions around their management of climate etrisk. In the second docket is the fund Management Side and if they are saying that they are green or sustainable carpentry, stands behind that but againin i think that helps investors make decisions and companies raise money so i think it helps all three of those points. Thank you and returning to the question of systemic risks and financial stability, and recent testimonies before this committee, the venture testified other concerns about the funds and Treasury Markets in the performance of Money Market Funds during conditions of financial stress in march of 2020 requiring federal intervention and testified regarding Treasury Markets that at the time the Treasury Market really lost functionality to most important financial Market Loss Functionality significantly and that being the initial onslaught of covid19 andos you share the assessment and concerns regarding Money Market Funds and Treasury Markets. I think you for reminding me into your earlier Question Shouldve said the market itself doeS Present the functioning of the market some systemic risk and three times, this fall of 19 and the in the spring of 20, we had more than hiccups inside of the Treasury Market and it is about structuring of the market and so working with the Secretary Yelena and terry powell, and even acting Chair Venom and i would hope that we can have more resilience for the clearing in the market and also bringing the principal Trading Firm the Highfrequency Trading firms into that agreement and the other question about the Money Market and the funds, we dohe have that on our docket as ranking member to me asked earlier that we do hope to do that. And made by q1 of the year to address Money Market Funds around the connections between the liquidity provided and what is called gates but also to look at the liquidity rules themselves in that market as well as those bond funds. Thank you and appreciate your testimony and Chairman Brown, i yield back. Thank you for joining us today and for the senators who wish to submit questions for the records, they are due one week from today Tuesday September 31st grade for a committee rules we ask that you respond in any questions within 45 days from the date you receive them and thank you again and without the hearing is adjourned. Thank you. [inaudible]. [inaudible]. [inaudible]. [inaudible]. [inaudible]. [inaudible]. The senate is about to get blamed for the nomination of u. S. District Court Judge from mexico. If i 30 east centers will vote on the nomination to be a u. S. Court of appeals judge the tenth circuit and also lawmakers are scheduled to look ahead work on Election Form and voting rights legislation. Live coverage of the u. S. Senate here on cspan2. The president pro tempore the senate will come to order. The chaplain, dr. Barry black, will lead the senate with prayer. The chaplain let uS Pray. Eternal god who comes to us with light and