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Opinion

Macaskill on markets: Will Gary Gensler burst the Spac bubble?

Gary Gensler could start his tenure running the Securities and Exchange Commission with a dramatic flourish by taking steps to burst the bubble in special purpose acquisition companies.

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Gary Gensler likes to make an impact, as he showed when he turned the US Commodity Futures Trading Commission (CFTC) from a second-tier regulator into the agency that led the implementation of tighter rules for Wall Street after the global financial crisis of 2008.

Gensler was also the driving force in making Libor manipulation charges a catalyst for change across the investment banking industry.

Banks paid around $10 billion in fines for manipulating Libor, and Gensler’s aggressive pursuit of Barclays for its involvement led to an important symbolic shift in 2012, when the firm’s chief executive Bob Diamond was forced to resign.

This took out the most vocal defender of free-wheeling industry practices and sent a stark warning to other bank heads about the post-crisis balance of power.

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Now Gensler is set for another stint as a Wall Street cop, as president Joe Biden’s nominee for chair of the Securities and Exchange Commission (SEC). Allison Herren Lee is acting chair pending Gensler’s confirmation by the Senate.

A move to burst the current bubble in special purpose acquisition companies (Spacs) seems tailor-made for the combination of energy and a detailed understanding of capital markets that made Gensler feared by bankers when he ran the CFTC from 2009 to 2014.

Gensler


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