Six U.S. Senators asked the Securities and Exchange Commission to explain why their staff are leaving at an unprecedented rate. “Efforts to ram through hurried rulemaking without proper analysis, deliberation or consideration of downstream negative impacts is nothing short of regulatory malpractice,” the lawmakers told SEC Chair Gary Gensler.
SEC staff leave at a record pace
Six U.S. senators have reportedly sent a letter to the chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, inquiring why the securities watchdog’s employees are quitting at a record rate.
Senators Thom Tillis and Mike Crapo (R -ID), Tim Scott(R-SC), Michael Rounds(R-SD), Bill Hagerty/R-TN) and Steve Dainese (R -MT) signed the Oct. 27 private letter. Reuters noted that the SEC has received it. Republican senators demand that the SEC explain to them why it is leaving its staff at such a rapid pace over the past ten years.
The lawmakers referenced a public report published on Oct. 13 by the Office of the Inspector General, the SEC’s own internal watchdog, detailing staff attrition and reports of discontent. Interviewed SEC workers, they stated that they did not receive any feedback about the rules they wrote. This highlights their concern over increased litigation as a result of shorter industry comment periods.
Gensler should explain his plan to address concerns raised by the report to the Senate and give more time to industry for feedback regarding new rules.
It emphasizes:
Regulatory malpractice can be found in the rush to pass hurried rules without proper analysis, discussion or consideration of any downstream adverse impacts.
In the letter, the regulator noted 26 proposals for new rules this year. This is more than the 2021 number and it was the largest total in five years.
SEC Chair Gensler has been accused by many of being too assertive and hostile in his approach to the regulation of the financial sector.
He is often criticized for his enforcement-centric approach in regulating crypto. Recent accusations by U.S. Representative Tom Emmer, R-MN), that the SEC was not acting in good faith were made. “Under Chair Gensler, the SEC has become a power-hungry regulator, politicizing enforcement, baiting companies to ‘come in and talk’ to the Commission, then hitting them with enforcement actions, discouraging good-faith cooperation,” said the congressman. Gensler thinks that crypto tokens can be considered securities.
Gensler was contacted by several U.S. senators last week to inquire about the “revolving door” between the SEC and crypto industry. Tech Transparency project reports that 28 SEC employees have made moves between the public sector and crypto companies.
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