House Republicans Follow Up on OIG Review of SEC Technology Failures

House Financial Services ("HFS") Republicans informed SEC Chair Paul Atkins that the Committee was conducting oversight on the agency's Office of Information Technology ("OIT") based on a recently completed Inspector General's ("OIG") "Special Review [of] Avoidable Errors [that] Led to the Loss of Former SEC Chair Gary Gensler’s Text Messages."

In a letter to Chair Atkins, HFS Chair French Hill, et al., underscored the OIG's findings that detail the loss of nearly one year of former SEC Chair Gary Gensler’s text messages due to procedural failures within OIT. The representatives highlighted that Mr. Gensler’s phone stopped syncing with the SEC’s device management system in July 2023, and that an August policy allowing remote wipes of inactive devices compounded the problem. They said that despite repeated warnings, staff failed to intervene and ultimately factory reset the device, permanently deleting its contents, which had not been backed up since October 2022. 

The representatives contrasted these lapses with the SEC’s aggressive enforcement against firms for recordkeeping violations, which yielded more than $400 million in penalties in 2023. They suggested that Mr. Gensler held companies to standards his own agency failed to meet. The representatives also noted that in Mr. Gensler's prior role as Chair of the CFTC, the CFTC had "faulted former Chair Gensler for using his personal email for official CFTC communications."

The representatives stated their intention to continue working with the SEC's Inspector General to gain clarity, pursue further oversight of the SEC's governance of recordkeeping, and ensure transparency.