Skip to content
SEC understaffed, needs more help controlling crypto, China-related companies, Gensler says

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee watch hearing on the SEC on Capitol Hill in Washington, United States, September 14, 2021.

Evelyne Hockstein | Reuters

Thousands of American institutions are struggling to keep their activities running smoothly with limited staff in the Covid-19 era.

This includes Wall Street’s main regulator, the Securities and Exchange Commission.

Chairman Gary Gensler said on Wednesday the SEC was trying to juggle an unprecedented list of financial challenges with a smaller staff.

“We are understaffed,” Gensler told CNBC’s “Squawk on the Street”. “It might sound strange to say this in an agency with 4,400 remarkable and dedicated employees working remotely during this difficult pandemic. But it’s 4-5% less than just five years ago.”

“We have an IPO boom, we have a SPAC boom, we have cryptocurrencies to deal with. We have the issues we talked about earlier about China,” he added. “I would at least like to go back to where we were in 2016 and I think we should probably be 5% or 10% taller than that.”

Gensler, who took office as SEC chief earlier this year, told Senate lawmakers on Tuesday he needed “a lot more people” to manage some 6,000 new digital assets. He said the regulator tries to balance an investor’s freedom to spend their own money with decades-old laws that require the SEC to find fraud in a wide range of assets.

CNBC Politics

Learn more about CNBC’s policy coverage:

“Investors can decide what to invest in as long as companies make full and fair disclosures. In these laws there is a very broad definition of what a security is,” he said. “Cryptocurrencies have arrived, I think the laws are clear – case law, the Supreme Court has weighed in on this on several occasions – that a lot of these tokens fall under securities law.”

SEC regulators analyze tons of new cryptocurrencies and digital assets to determine which are considered securities under U.S. law and subject to the agency’s oversight.

Gensler said his team has dispersed investigating fraudulent companies linked to China, managing those seeking to enter public markets and determining whether the SEC should crack down on payment for order flows.

Gensler’s calls for more staff – and a budget – mirror more urgent calls from the Internal Revenue Service, the division of the Treasury Department responsible for collecting federal taxes.

Deputy Assistant Treasury Secretary Mark Mazur told lawmakers in June that budget cuts had prevented the ministry from pursuing tax evasion and other frauds through regular audits.

Budget cuts to the IRS forced it to cut 33,378 full-time positions between fiscal 2010 and 2020, including a significant number of taxpayer services and enforcement staff.