House Republicans Criticize SEC Response to FTX-Related Enforcement Document Request

House Financial Services Committee Chair Patrick McHenry (R-NC) and Chair of the Subcommittee on Oversight and Investigations Bill Huizenga (R-MI) criticized the SEC's response to requested information on the recent enforcement action against FTX founder and former CEO Sam Bankman-Fried.

In a letter to SEC Chair Gary Gensler, the legislators said that the SEC's response to the House Financial Services Committee's document request (see previous coverage) was "insufficient" and impeded their responsibility of oversight into such actions. The letter outlined the timeline of the Committee's document request and the SEC's response to date:

I. Background

• On February 10, 2023, the Committee sent a letter requesting documents related to charges against Sam Bankman-Fried by the SEC.
• The SEC ignored the deadline and impeded Committee staff from discussing the request until a formal request was made by Mr. Huizenga.
• The subsequent staff-level conversations did not yield the requested documents.
• On March 15, 2023, the SEC provided a briefing on the enforcement process, which was not responsive to the request.
• The 232 pages of documents provided by the SEC after the briefing were already publicly available and not responsive to the request.

II. Narrowing of Scope

• The Committee staff provided a narrowed list of custodians, a narrowed time frame and a list of identifiable documents (such as the staff recommendation memo presented to the Commission for a vote on charges).
• Committee staff followed up more than a week later to check on progress.

III. Unacceptable Response

• SEC staff informed the Committee that the production process was time-consuming and extensive without indicating when production would be completed.
• Committee found this unacceptable and set a new deadline for production of the requested information by 5:00 p.m. on April 17, 2023.

The letter to SEC Chair Gensler listed 19 specific instructions, definitions and "electronic production instructions" applicable to the document request. The legislators warned that they will use a compulsory process, if necessary, to obtain the requested information if the SEC fails to satisfy the request by the new deadline.