McHenry, Huizenga Demand Production of Outstanding Document Requests from SEC, Threaten Committee Action Amid Continued Stonewalling
Washington,
May 10, 2023 -
House Financial Services Committee Chairman Patrick McHenry (NC-10) and Oversight and Investigations Subcommittee Chairman Bill Huizenga (MI-04) sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler demanding that the Commission produce outstanding documents previously requested by the Committee. These materials include information related to charges recommended against FTX founder Sam Bankman-Fried, the SEC’s disastrous proposed climate disclosure rule, and registration information for digital asset entities.
The SEC has consistently and knowingly failed to be responsive to requests from Congress, beginning with the February 10 request for information regarding charges against Bankman-Fried. Should the SEC fail to produce the recommendation memo and its supporting evidence and documents before 5 p.m. on Friday, May 19, 2023, the Committee will schedule testimony from the Commission’s Legislative Affairs and Office of the General Counsel teams to examine their failure to comply with congressional requests.
Read the full letter here or below:
“The Committee on Financial Services (Committee) made clear at the start of the 118th Congress that robust oversight of the Securities and Exchange Commission was forthcoming. The Committee also made clear that your full cooperation in responding to oversight requests was expected. Since February, the SEC has been less than forthcoming with respect to this Committee’s requests for information.
“On February 10, 2023, we sent you a request for information about the charges against Sam Bankman-Fried. To date, you have produced 232 pages of documents. Of those 232 pages, all were publicly available documents. On March 15, 2023, your staff provided a general briefing about the Division of Enforcement. While informative, this briefing was not responsive to the February request. Following that briefing, Committee staff offered narrowing terms and an easily identifiable document—the charges recommendation memorandum.
“After not receiving a responsive production for weeks, we sent you a letter on April 12, 2023, reiterating the importance of producing the requested information. Your staff responded that they were not in a position to produce anything further at that time. When asked about the memorandum during your testimony on April 18, 2023, you provided a similar response. Since then, no further documents have been received since the initial 232 pages of unresponsive documents were produced. That is unacceptable.
“Unfortunately, the Committee’s February 10, 2023, request is not the only request you continue to ignore. On February 22, 2023, the Committee sent a separate letter seeking additional information about the proposed climate rule. After much back and forth the SEC produced 29,464 pages. Unfortunately, volume alone does not automatically satisfy a request. Of those nearly 30,000 pages, only 97 of them were non-public, responsive documents. Committee staff have had multiple conversations about this request and made clear that it is not interested in publicly available documents. The Committee staff have attempted to narrow the document request and to focus the SEC’s work on a single item from the 13-item list included in the original request.
“In addition to the second request, on April 26, 2023, the Committee sent a letter to you asking for a list of digital asset entities that have sought to register since you became Chair. The letter also sought relevant documents and communications about that process. Predictably, during the first conversation with SEC staff about the request, they reiterated how overly burdensome the Committee’s requests have been. They specifically asked us to prioritize our requests so that they could focus on one over the others.
“To date, your responses to our requests have been wholly inadequate. It is inconceivable to us that a nearly 5,000-person agency with nearly 150 attorneys in its General Counsel’s office and more than 200 employees in the IT department is struggling to process three requests from Congress in a timely and responsive manner.
“However, as an extraordinary accommodation to the SEC—while reserving the right to receive the entire set of documents requested—and with the hope of receiving a timely response to the Committee’s three outstanding document requests, the Committee has identified the following priority requests. First, the SEC must produce documents responsive to request number 11 in the ‘Schedule of Records’ from the February 22, 2023, climate rule request. Second, the SEC must produce documents responsive to request number 1(a) in the April 26, 2023, request about digital asset registration. Both sets of documents should be produced as soon as practicable, but no later than 5 p.m. May 19, 2023.
“Finally, the Committee expects that the charges recommendation memorandum and all supporting evidence and documents be produced no later than 5 p.m. on Friday, May 19, 2023. If you fail to provide the memorandum and its supporting evidence and documents by the deadline, we will examine the Committee’s calendar to schedule testimony from your Legislative Affairs and Office of the General Counsel teams to examine the SEC’s failure to comply with congressional requests.”
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