Three committee chairs in the United States House of Representatives are demanding a more satisfactory response from U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler regarding their concerns about the agency’s compliance with recordkeeping requirements. In a letter sent to Gensler, Judiciary Committee Chair Jim Jordan, Oversight Committee Chair James Comer, and Financial Services Committee Chair Patrick McHenry stated that the response they received did not adequately address the direct requests made in their previous letter.
In their initial letter, the congresspeople requested certification that the SEC adheres to federal recordkeeping and transparency rules and asked for assurance that Gensler and his subordinates have not used private email accounts for official business. They also sought clarification on the agency’s definition and use of “off-channel communications.” However, Gensler’s response failed to address these specific concerns.
The committee chairs, along with Rep. Tom Emmer, were responding to a report by the Wall Street Journal that criticized the SEC and other agencies for their inadequate recordkeeping practices. The report concluded that government officials engage in similar record-keeping misconduct for which Wall Street groups had recently been fined by the SEC. The article specifically highlighted the use of chats by officials for government business, which are not searched to fulfill subsequent Freedom of Information Act requests.
The follow-up letter sent by the committee chairs reiterated their original requests and added a demand for an explanation if Gensler does not intend to comply with any or all of their requests. They asked Gensler to describe the factual and legal basis for his noncompliance with their inquiries. The letter, dated June 28, also referenced inconsistencies in Gensler’s publicly accessible meeting schedules in 2021.
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This dispute comes in the wake of criticism directed at Gensler from the Blockchain Association. In a paper released by the association, they argued that Gensler should recuse himself from making decisions related to digital asset enforcement. The paper claimed that the SEC has neglected its role as a rulemaking body in the digital asset space. It specifically highlighted the unresolved question of whether and when a digital asset represents a “security.”
The association stated that Gensler has expressed his belief that all digital assets, except for Bitcoin (BTC), are unregistered securities and that all digital asset trading platforms are unregistered securities exchanges. They argue that Gensler’s statements show a biased perspective and a lack of due process. They assert that agency decision-makers should not only act without bias but also avoid the appearance of bias.
The paper also reminded readers that recipients of Wells notices, which indicate potential enforcement actions by the SEC, can seek Gensler’s recusal through the SEC or in federal court. This highlights the potential for legal challenges to Gensler’s involvement in decisions related to digital asset enforcement.
In conclusion, the committee chairs’ latest letter to SEC Chair Gary Gensler demands a more satisfactory response to their concerns about the agency’s compliance with recordkeeping requirements. They are seeking assurance that the SEC adheres to federal recordkeeping and transparency rules and clarification on the use of private email accounts and “off-channel communications.” Meanwhile, the Blockchain Association has called for Gensler’s recusal from digital asset enforcement decisions, citing concerns of bias. These developments indicate ongoing tensions and scrutiny surrounding the SEC’s actions and decision-making processes.
