Press Release

McHenry, Jordan, and Comer Blast Gensler SEC’s Lack of Transparency

WASHINGTON — The Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), the Chairman of the House Judiciary Committee, Jim Jordan (OH-04), and the Chairman of the House Oversight and Accountability Committee, James Comer (KY-01), sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler. The Chairmen identify significant concerns with Chair Gensler’s potential failure to comply with federal record keeping laws, while slamming Gensler’s inadequate response to a previous inquiry regarding the matter.

Read the full letter to SEC Chair Gensler here.

Read key excerpts from the letter below:

“Chairman Gensler:

“We write regarding your failure to adequately respond to our letter dated November 1, 2022, addressed to the Securities and Exchange Commission (‘SEC Off-Platform Letter’). In our letter, we requested information related to your and the SEC’s compliance with federal recordkeeping requirements based on, among other things, “evidence uncovered during Freedom of Information Act (‘FOIA’) litigation suggest[ing] the SEC is failing to identify and produce records of official business conducted on non-email or ‘off-channel’ platforms, such as Signal, WhatsApp, Teams, and Zoom—regardless of whether the communication took place on a personal or business device.” While your response letter refers to the operations of the SEC’s Records and Information Management Program and FOIA Office, the SEC’s regulations, guidance, and training, and the SEC’s general commitment to complying with federal recordkeeping obligations, you failed to respond directly to the five clear requests set forth in the SEC Off-Platform Letter. This includes providing the specific certifications regarding the SEC’s and your personal compliance with federal recordkeeping requirements.

“In addition, we are concerned that the SEC may be failing to meet its recordkeeping obligations in connection with the Administrative Procedure Act’s (‘APA’) notice and comment rulemaking process. More specifically, we question whether the SEC has documented all feedback on its proposed rules in relevant comment files as required, including any and all meetings you had with external parties that may have covered rule proposals that were pending at the time. As you know, documenting all comments received from the public – whether that feedback is received in writing through comment letters or orally through in person meetings with SEC representatives– is critical. Documentation ensures that the SEC formulates and adopts rules based on a full and complete record in compliance with the APA

“Release of your public calendars suggests you met with CalPERS individually, or together with other groups, 13 times since you became Chairman in April 2021. Seven of those meetings occurred after March 21, 2022, the date on which the SEC issued its rule proposal to ‘Enhance and Standardize Climate-Related Disclosures for Investors’ (‘Climate Proposal’). CalPERS has generally supported the SEC’s radical climate disclosure rule proposal. Moreover, according to a publicly available CalPERS document released in November 2022:

“CalPERS staff have met with the SEC chair and staff several times over the last two years to discuss the climate-related disclosures. Guided by extensive research, we have and continue to advocate for sound public policy and corresponding high-quality standards for mandatory climate risk reporting, which is consistent, comparable, and reliably assured.

“Yet our review of the Climate Proposal comment file as of the date of this letter shows only two meetings between you and CalPERS.

“Similarly, according to your public calendars, you met with Better Markets individually or together with other groups nine times since you became Chairman in April 2021. You also met with Healthy Markets individually or together with other groups eight times during that same period. Nine of the total 13 meetings you had with Better Markets and/or Healthy Markets (individually or together with other groups), occurred after the release of the Climate Proposal. Two occurred after the release of your equity market structure rule proposal on December 14, 2022. Both Better Markets and Healthy Markets have generally supported your Climate Proposal and your similarly radical rule proposals to reform the structure of the U.S. stock market. Yet our review of the Climate Proposal comment file, and the four equity market structure rule proposal comment files as of the date of this letter, shows no record of any meetings between you and Better Markets or Healthy Markets in either of those files.

“The document further states, ‘In 2022, the SEC issued proposed rules for The Enhancement and Standardization of Climate-Related Disclosures for Investors, and in June 2022, CalPERS provided a comment letter reflecting on the proposed rules and providing support to the SEC for taking steps forward that CalPERS, and many investors, have called for.’

“Your failure to adequately respond to the SEC Off Platform Letter, combined with the potential recordkeeping matters described above, continue to raise troubling questions about the SEC’s compliance with applicable federal laws. They also raise disturbing questions regarding your own commitment to holding the SEC accountable to the same standards you seek to impose on the individuals and entities you regulate. The American public deserves a capital markets regulator that plays by its own rules, not one that acts above the law.”