SEC Faces Heat Over Missing Gensler Texts as Lawmakers Demand Accountability

TLDR:

• Lawmakers press SEC over lost Gary Gensler texts, citing failures in oversight and recordkeeping across the agency.
• The SEC Inspector General report found Gensler’s phone stopped syncing for months before a wipe erased key data.
• House Committee leaders said Gensler’s lost texts included mission-related messages with commissioners and senior staff.
• The controversy renews scrutiny over Gensler’s communication practices, including earlier email compliance issues in 2013.

A fresh clash has emerged between Congress and the Securities and Exchange Commission. 

Four House Financial Services Committee chairs sent a letter to SEC Chair Paul Atkins, calling out failures in recordkeeping. The issue stems from the deletion of nearly a year’s worth of text messages from former SEC Chair Gary Gensler. Concerns now center on whether the agency applied its own standards fairly.

Lawmakers Question SEC’s Handling of Lost Records

According to a post by the Financial Services GOP account, Chairman French Hill, Rep. Ann Wagner, Rep. Dan Meuser, and Rep. Bryan Steil urged stronger oversight. 

They pointed to a recent Office of Inspector General (OIG) review that revealed major IT lapses. That report found that Gensler’s phone had stopped syncing with the SEC’s systems but was never properly addressed by staff. The lapse stretched for months before his device was wiped.

The OIG noted that the wipe occurred weeks after agency policy dictated it should. By then, backups were outdated, leaving critical data unrecoverable. The reset resulted in a permanent loss of records, including business-related texts with other SEC officials. 

Lawmakers say the handling raises questions about whether Gensler received special treatment.

The lawmakers highlighted that during Gensler’s tenure, the SEC fined financial firms hundreds of millions for poor recordkeeping. The fact that the regulator itself may have failed to follow its own rules has brought sharp scrutiny. Calls for accountability and transparency are now front and center.

Oversight Push Intensifies on SEC IT Failures

The letter to Atkins stressed broader concerns about the SEC’s technology practices. 

Lawmakers said the OIG findings showed a failure to investigate known device issues. Warnings were flagged multiple times yet ignored, according to the report. By September 2023, the smartphone was reset, erasing nearly a year’s worth of data.

The Committee’s concerns went beyond the lost messages. Investigators reviewed a list of contacts Gensler was believed to text most frequently. Yet the list excluded fellow commissioners, raising questions about the thoroughness of the review.The OIG later found evidence that Gensler’s messages included mission-related communications with senior officials.

The lawmakers stressed that this was not the first time questions had been raised about Gensler’s communications. 

In 2013, an Inspector General review faulted him at the Commodity Futures Trading Commission for using personal email for official work. They now argue the SEC must tighten internal controls to meet federal recordkeeping laws.

The Committee said it will continue engaging with the OIG to review unanswered questions. Lawmakers want clarity on how the errors occurred, why oversight broke down, and whether corrective measures are being put in place. They warned that transparency from the SEC is required as investigations move forward.

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