Gary Gensler’s Vanishing Messages Trigger Republican Inquiry

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Former Securities And Exchange Commission Chair Gary Gensler lost nearly a year of text messages after an automated IT action, a federal review found.

According to a special review by the SEC’s Office of Inspector General, information technology staff triggered an automated “enterprise wipe” that erased text messages sent and received on Gary Gensler’s government phone between October 18, 2022, and September 6, 2023.

The review says the device had not been backed up during that interval, and routine alerts and change controls were missed or ignored.

Gary Gensler & The Missing Text: Inspector General’s Findings

The OIG report found the wipe resulted from a poorly understood automated policy put in place by the SEC’s Office of Information Technology in August 2023.

Based on the review, the wipe was avoidable and was compounded by weak change management, failures to act on vendor software flaws, and a lack of timely backups — gaps that left key messages unrecoverable. The report lists recommendations and said agency management has responded with corrective steps.

Source: US House Committee on Financial Services

Lawmakers See A Double Standard

House Republican leaders are pressing the SEC for answers. Based on reports from the House Financial Services Committee, Republican chairmen have written to SEC Chair Paul Atkins seeking details about how the loss happened, what records were affected, and whether the agency’s recordkeeping met federal law.

They point out that in fiscal year 2023 the SEC obtained more than $400 million in penalties tied to recordkeeping and off-channel communications by firms, and say the agency itself must meet the same standard it enforced on others.

Political And Legal Stakes

The missing messages overlap with a busy year of enforcement actions and policy talks at the SEC. Reports have disclosed that some deleted texts involved enforcement work tied to crypto cases and other high-profile matters, which could matter to litigants and to records requests under the Freedom of Information Act, or FOIA.

Across the industry, critics point to Gary Gensler as instrumental in an alleged Biden administration campaign to nudge banks into restricting services to crypto companies, and they charge that the SEC under his watch weakened the sector by bringing several lawsuits.

What The Agency Has Said And What’s Next

The SEC’s OIT and agency leadership have acknowledged the failures flagged by the OIG and have described steps to fix system controls and backup processes.

The House committee’s letter asks for a full account and timelines, and signals lawmakers may follow up with additional oversight or hearings.

For now, investigators and agency officials are focused on closing the technical gaps the report identified.

Featured image from Getty Images, chart from TradingView

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