Press Releases

House Committee on Financial Services Chairman French Hill (AR-02), Subcommittee on Capital Markets Chair Ann Wagner (MO-02), Subcommittee on Oversight and Investigations Chair Dan Meuser (PA-09), and Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence Chair Bryan Steil (WI-01) today sent a letter to Securities and Exchange Commission (SEC) Chair Paul Atkins to raise their concerns over the SEC’s loss of nearly a year of former Chair Gary Gensler’s texts.

In their letter, the Chairs cite failures in oversight, recordkeeping, and potential special treatment. The lawmakers also called for further investigation to ensure accountability and transparency.

Read the full letter here or below:

Dear Chair Atkins:

Pursuant to Rule X of the House of Representatives, the House Committee on Financial Services (Committee) is conducting oversight of the Securities and Exchange Commission’s (SEC or Commission) Office of Information Technology (OIT). The SEC Office of Inspector General (OIG) released report number 587 titled, “Special Review: Avoidable Errors Led to the Loss of Former SEC Chair Gary Gensler’s Text Message” (the report) finding nearly one year’s worth of lost text messages of former Chair Gary Gensler. The report raises concerns regarding the SEC’s treatment of information technology (IT), particularly as it relates to its most senior officials.

According to the report, on July 6, 2023, former Chair Gensler’s “smartphone stopped communicating with the SEC’s mobile device management system.” Despite the phone “function[ing] normally and [being] used regularly,” the SEC’s mobile device management system deemed the phone “inactive” for 62 days. The issue was repeatedly flagged, but OIT staff made no attempt to investigate or address the issue. On August 10, 2023, OIT “instituted a new policy of remotely wiping any SEC mobile device that did not communicate with the mobile device management system for at least 45 days.” The Committee is concerned not only that OIT would implement a policy that was “poorly understood,” but also that it appears former Chair Gensler may have been accorded special treatment. Former Chair Gensler’s phone was not wiped until September 6, 2023, more than two weeks after the wipe should have occurred.

Notably, even though the smartphone was wiped, it was still possible to retain former Chair Gensler’s information on the phone. However, OIT staff factory reset the smartphone resulting “in the permanent deletion of the device’s data, including nearly a year’s worth of text messages.” This data loss was due to the fact that OIT had not backed-up former Chair Gensler’s device since October 18, 2022.

During former Chair Gensler’s tenure, the SEC sued several financial firms for “widespread record keeping failures.” In fiscal year 2023 alone, the SEC collected “more than $400 million to settle charges that [25 advisory firms, broker-dealers, and credit rating agencies] violated the recordkeeping requirements of the federal securities laws[.]” Interestingly, former Chair Gensler stated, “[a]s technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications.” It appears that former Chair Gensler held companies to a standard that his own agency did not meet. As the OIG admits, while the SEC attempted to recover the lost texts, “the [SEC] was unable to collect or determine the entire universe, including some federal records.”

When collection of the data through forensic means was unsuccessful, OIT resorted to reviewing a report identifying the phone numbers which exchanged messages with former Chair Gensler’s phone. Staff provided OIT with “a list of 34 agency employees with whom they predicted he texted most frequently.” However, former Chair Gensler “did not provide input into the list, and the original list did not include his fellow Commissioners.” While former Chair Gensler’s staff claimed he “usually texted for administrative reasons,” OIG’s “review found multiple instances of substantive, mission-related communications between Gensler, his staff, his fellow Commissioners, and other senior officials[.]”

Unfortunately, this is not the first time former Chair Gensler has been engulfed in controversy surrounding his use of smartphones and compliance with federal recordkeeping laws. In 2013, the Commodity Future Trading Commission’s (CFTC) OIG faulted former Chair Gensler for using his personal email for official CFTC communications.

Collectively, these incidents, along with the OIG’s findings, raise serious concerns about former Chair Gensler’s and OIT’s compliance with federal recordkeeping laws, transparency obligations, and the integrity of agency oversight. The Committee is engaging with the OIG to learn more about their report, seek clarity on outstanding questions, and discuss additional areas that require further oversight and investigation. The Committee looks forward to the Commission’s engagement and transparency during this process. Thank you for your attention to this important matter.