Press Releases

Top House Republicans Press SEC for Skirting Record-Keeping and Transparency Laws

Washington, November 2, 2022 -

House Financial Services Committee Ranking Member Patrick McHenry (R-NC), House Judiciary Committee Ranking Member Jim  Jordan (R-OH), House Oversight and Reform Committee Ranking Member James Comer (R-KY), and House Financial Services Subcommittee on Oversight and Investigations Ranking Member Tom Emmer (R-MN) recently sent a letter to SEC Chair Gary Gensler denouncing the Biden Administration's inconsistency and hypocrisy of enforcing record-keeping laws, this time at the SEC. Recent reports suggest that SEC officials are using "off-channel" communications platforms, such as Signal, WhatsApp, Teams, and Zoom, for official business and without producing these records in response to open-record requests. 

Excerpts of the letter to Gensler:

"Recent reports suggest the SEC, under your leadership, is likewise failing to comply with federal record-keeping statutes. In particular, evidence uncovered during Freedom of Information Act (FOIA) litigation suggests the SEC is failing to identify and produce records of official business conducted on non-email or 'off-channel' platforms, such as Signal, WhatsApp, Teams, and Zoom—regardless of whether the communication took place on a personal or business device. As recounted by a FOIA litigator, the SEC is hiding its 'off-channel' communications with environmental activists, even though the communications qualify as federal records.

"While the SEC is failing to comply with federal transparency and record-keeping laws, the SEC is aggressively enforcing record-keeping laws on private businesses. The SEC recently charged 16 firms more than $1.1 billion combined for allegedly failing to maintain and preserve electronic communications. In a press release announcing the penalties, you ironically emphasized the importance of transparency, stating: 'Finance, ultimately, depends on trust. By failing to honor their record-keeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust.' The SEC's Director of Enforcement similarly intoned that record-keeping requirements are 'sacrosanct.'"

House Financial Services Committee Ranking Member Patrick McHenry (R-NC) on the letter to Gensler: 

"This is yet another example of Chair Gensler's hypocritical mismanagement of the SEC. Chair Gensler is aggressively pursuing enforcement actions against companies who use off-channel communications while at the same time reportedly failing to comply with federal record keeping laws. Transparency and accountability at our federal agencies is essential—especially at the SEC as it pursues an unprecedented number of rulemakings that could have profound impacts on our capital markets. House Republicans are demanding answers as we work to return accountability to DC bureaucrats and ensure Biden’s regulators are held to the same standards they hold their regulated entities."

House Oversight and Reform Committee Ranking Member James Comer (R-KY) on the letter to Gensler:

"It appears the Biden Administration has rules for thee but not the SEC. Under Chair Gensler's watch, the SEC is skirting federal transparency and records laws while fining companies for doing the same. It’s past time the Biden SEC engage in the transparency they claim is so important. This type of government hypocrisy undermines Americans’ trust in our institutions and fails to deliver the transparency they deserve. Chair Gensler must provide answers to Congress and the American people."

House Financial Services Subcommittee on Oversight and Investigations Ranking Member Tom Emmer (R-MN) on the letter to Gensler:

"Chair Gensler's regime at the Securities and Exchange Commission has been characterized by regulatory hypocrisy and inconsistency. This is no different. The American people deserve transparency from their regulators, but time and time again, Chair Gensler refuses to practice what he preaches. It is inappropriate for SEC to target the private sector for failing to comply with record-keeping laws when the SEC itself is in violation of similar transparency laws. I'm proud to join Ranking Member Jordan, Ranking Member Comer, and Ranking Member McHenry in demanding accountability from Chair Gensler and the Securities and Exchange Commission."

Read the full letter to Gensler here



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