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The Biden Administration has moved quickly to nominate new
leadership at the Securities and Exchange Commission
( SEC or Commission ). President Biden, in a
move that provides insight into his priorities and the approach his
administration will pursue with regard to regulatory action, has
nominated former Commodity Futures Trading Commission
( CFTC ) Chairman Gary Gensler to lead the SEC. Mr.
Gensler, who led the CFTC during the Obama Administration in the
aftermath of the 2008 financial crisis, is expected to take a
tougher stance toward Wall Street than the prior administration
Tucked into the 2021 National Defense Authorization Act (NDAA)
1 passed over a presidential veto on January 1, 2021,
2 on page 1,238 of the 1,480-page bill, was a modification to the Securities Exchange Act of 1934 (Exchange Act)
3 that constitutes a response to a couple of recent Supreme Court cases that had limited the U.S. Securities and Exchange Commission’s (SEC) ability to obtain disgorgement from defendants in enforcement actions. Prior to the NDAA, the SEC did not have explicit statutory authority to obtain disgorgement from securities law violators; instead, federal courts have conferred such authority in a patchwork of cases over the past 50 years. In the NDAA, Congress modified a section of the Exchange Act that sets out the remedies available to the SEC in addressing violations of the securities laws