Congress Seeks to Remove SEC Chair Gary Gensler

In the latest salvo against much-maligned SEC Chair Gary Gensler, House Majority Whip Tom Emmer (R-Minn) and Rep. Warren Davidson (R-Ohio) have introduced legislation to restructure the SEC and essentially remove the Chair from his position. 

The proposed legislation aims to restructure the SEC by adding an additional commissioner and establishing an executive director position to oversee the agency’s operations. By introducing the executive director position, the change would effectively remove Gary Gensler as chair, and would redistribute responsibilities and decision-making to the commissioners and the executive director. 

Republican lawmakers have not been shy in criticizing Chair Gensler's leadership at the SEC. During his testimony before the House Financial Services Committee, GOP lawmakers criticized the SEC's "regulation by enforcement" approach to the cryptocurrency industry, the agency's climate disclosure rule proposal, and the rapid pace of rulemaking. These concerns have prompted Rep. Emmer and Rep. Davidson to take action, stating that the SEC's priorities should be aligned with protecting investors rather than being driven by the Chair's discretion.

Under the current structure, the SEC consists of five commissioners, with one designated as chair. The commissioners are appointed by the president and confirmed by the Senate, with limitations on the number of commissioners from the same political party. The proposed SEC Stabilization Act would increase the number of commissioners to six, ensuring that each political party can hold three seats. Additionally, the legislation would increase the commissioner’s term from five years to six years.

The SEC Stabilization Act is largely considered a messaging bill. Given the current makeup of Congress, it is unlikely that this legislation will be successful in either chamber.