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SEC Chair Gary Gensler grilled by senators

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Former Commodity Futures Trading Commission Chairman Gary Gensler testifies at a U.S. Senate Banking Committee hearing on systemic risk and market oversight on Capitol Hill in Washington May 22, 2012.

Jonathan Ernst | Reuters

WASHINGTON – Securities and Exchange Commission Chairman Gary Gensler on Tuesday assured lawmakers that Wall Street’s top regulator is working overtime to create a set of rules to oversee the volatile cryptocurrency markets while balancing the interests of American innovators.

Gensler told the Senate Banking Committee that he and his team are trying to protect investors through better regulation of the thousands of new digital assets and coins, as well as oversight of the more-familiar bitcoin and ether markets.

The SEC chief noted the enormity of the task, telling Sen. Catherine Cortez Masto, D-Nev., that the regulator could use “a lot more people” to evaluate the 6,000 novel digital “projects” and determine whether they all qualify as securities under U.S. law.

“Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending,” Gensler said in prepared remarks. “Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.”

Still, some lawmakers pressured Gensler to pick up the pace, arguing the opaque definitions and an uncertain marketplace not only lead to unchecked speculation, but could also stifle innovation.

Sen. Pat Toomey, a Pennsylvania Republican and the committee’s ranking member, pressed Gensler early in the hearing over whether stablecoins meet the definition of a security since investors don’t necessarily expect those assets to return a profit.

Stablecoins are a type of cryptocurrency linked one-for-one to dollars or other traditional currencies and, as such, tend to be less volatile than their peers in the asset class.

“My whole point is, I think we need clarity on this,” Toomey said. “I think you should publicly disclose this. … And we certainly shouldn’t be taking enforcement action against somebody without having first provided that clarity.”

But where Toomey and his Republican colleagues voiced concern about the SEC’s potential to stifle innovation without a public set of guidelines, Democrats tended to highlight speculative risk they see as rampant in the cryptocurrency market.

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Sen. Mark Warner, D-Va., jokingly criticized Gensler for only putting one “wild” in his description of the cryptocurrency industry as the “Wild West” of financial regulation.

“As someone who shares some of your concerns about crypto, I will acknowledge that you only put one ‘wild’ in front of ‘west’ as opposed to two,” he quipped. “As somebody who managed to do pretty well financially because of innovation, I’m all in. But we do need some guidance. We do need some direction.”

“I would go to the two ‘wilds’ in terms of the description of this area, as good as some of the innovation is,” he added.

Controversial practice under scrutiny

Lawmakers also peppered Gensler with questions about the SEC’s ongoing analysis of payment for order flow, a controversial practice that online brokerages like Robinhood Markets use to make money.

Firms like Robinhood sell their customers’ trades to market makers like Citadel Securities that execute the buy and sell orders. Market makers generate profits by pocketing the difference between the price at which they buy shares on the open market and the price they receive from selling them to Robinhood clients. 

That means there is an incentive for market makers to inflate the price they quote to Robinhood’s customers. And given Citadel’s commanding market share, some regulators are concerned that investors may not be getting the best deal since online brokerages themselves have an incentive to keep rosy relations with the companies that buy their trading volume.

“The United Kingdom, Canada and Australia have bans,” Gensler told reporters following the hearing. “We’re taking a look at the whole market structure.”

The retail public is paying in that “they don’t necessarily have order-by-order competition,” Gensler said, meaning that trading orders are bought up by just a few market makers known as “wholesalers” and aren’t fought over with promises of the lowest price.

Robinhood’s chief legal officer said on Monday that he believes the SEC will ultimately “arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors and they’re not going to ban it.”

Diversity and climate

Senator John Kennedy, a Republican from Louisiana.

Andrew Harrer | Bloomberg | Getty Images

Nasdaq’s goal for most U.S. companies is to have at least one woman director in addition to another board member who self-identifies as a member of a racial minority or the LGBTQ community.

Sen. John Kennedy, R-La., perhaps offered the most direct critique of the SEC’s decision to approve of Nasdaq’s rule.

“As to the people and the companies that you regulate, do you consider yourself to be their daddy?” Kennedy asked of Gensler. “Why do you impose your personal preferences about cultural issues and social issues on companies, and therefore their customers and their workers? Like climate change and the Second Amendment.”

“I’m sure you have personal feelings about abortion,” Kennedy continued. “Do you have plans to impose those values on companies?”

“I think that I am not doing that,” Gensler replied. “I think what I’ve been trying to do is say, if investors want information about climate risk … we at the SEC have a role to put something out to notice and comment, do the economic analysis and really see what investors are saying.”

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EV start-up Rivian beats Tesla, GM, Ford as first automaker to produce electric pickup

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Rivian R1T electric truck

Source: Rivian

EV start-up Rivian is the first automaker to bring an electric pickup to the consumer market, beating Tesla, General Motors and others in what’s expected to be a hotly contested segment in the years ahead.

Rivian founder and CEO RJ Scaringe on Tuesday tweeted that the company’s first R1T pickup for a customer drove off the assembly line this morning at its plant in Normal, Ill.

“After months of building pre-production vehicles, this morning our first customer vehicle drove off our production line in Normal!  Our team’s collective efforts have made this moment possible,” he said. “Can’t wait to get these into the hands of our customers!”

Photos tweeted by Scaringe show workers cheering with several R1Ts on the assembly line.

A Rivian spokeswoman confirmed that the vehicles being produced are saleable. She declined to discuss the company’s plans for ramping-up production, including how many trucks were produced today, and who will be the first customers to receive the vehicles.

The beginning of production, which has been delayed several times, comes weeks after the Amazon– and Ford Motor-backed company filed a confidential draft registration form for an IPO.

Rivian is expected to be the first of a handful of automakers to produce an electric pickup by next year. GM is expected to be next this fall with the GMC Hummer EV pickup, followed potentially next year by EV start-up Lordstown Motors, Ford and then Tesla, which recently pushed back deliveries of its Cybertruck from this year to late-2022.

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TikTok unveils mental health features as Instagram comes under fire

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Rafael Henrique | LightRocket | Getty Images

TikTok on Tuesday announced a slew of features intended to help users struggling with mental health issues and thoughts of suicide.

These include well-being guides, a support guide for those struggling with eating disorders and a search intervention feature that will direct users to support resources when they look up phrases such as #suicide.

TikTok’s announcement of the new features followed a Tuesday Wall Street Journal report that said Facebook has repeatedly found that its Instagram app could be harmful to teenagers’ mental health, in certain situations.

The two apps are in tight competition for the teens’ attention. Since its 2017 launch, Chinese-owned TikTok has gained ground on Instagram, and last year surpassed it as U.S. teenagers’ second-favorite social media app, after Snapchat, according to an October 2020 report by Piper Sandler.

TikTok’s new features will direct users to support, such as a Crisis Text Line if they search for the term “suicide.”

Although TikTok’s new features may be timed to National Suicide Prevention Week, which was last week, the timing is fortuitous. Following the Journal’s report, U.S. lawmakers heavily criticized Facebook for social media’s impact on teen mental health and the company’s failure to address the problems.

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Amazon faces Teamsters union drive at Canadian warehouse

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People hold a banner at the Amazon facility as members of a congressional delegation arrive to show their support for workers who will vote on whether to unionize, in Bessemer, Alabama, U.S. March 5, 2021.

Dustin Chambers | Reuters

Amazon warehouse workers in Alberta, Canada, have filed for a union election, a major labor union said Tuesday, marking the retail giant’s latest labor fight.

The International Brotherhood of Teamsters, through a local chapter, late Monday filed for a vote on union representation with the Alberta Labor Relations Board at an Amazon warehouse in Nisku, Alberta, known as YEG1. The labor agency must first approve the election, at which point all workers at YEG1 employed as of Sept. 13 will be able to vote whether to join Teamsters Local Union 362. A spokesperson from Teamsters Canada said the warehouse employs between 600 and 800 workers.

“Amazon won’t change without a union,” said François Laporte, national president of Teamsters Canada, in a statement. “Be it on job security, pace of work, discrimination, favoritism, or wages, the company has proven itself to be profoundly anti-worker.”

Representatives from Amazon didn’t immediately respond to a request for comment. Amazon has previously said the company respects workers’ right to join or not join a union.

The union drive represents the latest attempt to organize Amazon workers, a highly sought after goal among labor unions in the U.S. and abroad for many years.

In April, workers at Amazon’s Bessemer, Alabama, warehouse voted overwhelmingly against unionization, with fewer than 30% of the votes tallied in favor of joining the Retail, Wholesale and Department Store Union. The union challenged the results of the election, claiming Amazon illegally interfered in the process, and the National Labor Relations Board is expected to issue a final decision in the coming weeks.

Even after the loss in Alabama, labor unions have continued efforts to organize Amazon workers. The Teamsters in June approved a resolution to fund and supply resources to Amazon workers hoping to unionize.

Teamsters Local Union 362 says YEG1 workers have raised concerns around discrimination and wages. Although Amazon recently bumped up hourly pay to between $17 and $21.65, workers say the pay raise coincided with the removal of a monthly performance bonus, “meaning that many Amazon workers are doubtful that the new raise will actually translate to more money on their paychecks,” Teamsters Local Union 362 said.

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