Ethics Controversy Surrounding SEC Chair Gary Gensler’s Meeting with Sam Bankman-Fried

Concerns are growing over a 45-minute Zoom call that took place between SEC Chair Gary Gensler and disgraced crypto mogul Sam Bankman-Fried in March 2022, as questions arise regarding the approval of the meeting by the agency’s ethics team. Critics argue that the meeting, held six months before Bankman-Fried’s arrest on fraud charges, raises allegations of conflicts of interest and cozy ties between Gensler and the accused fraudster.

Recently obtained documents through the Freedom of Information Act reveal that there is no record of Gensler seeking permission from the SEC’s Office of the Ethics Counsel to meet with Bankman-Fried. This not only breaches the agency’s own protocol but experts suggest that if Gensler had requested permission, it likely would have been denied.

Although a spokesperson for the SEC claims that Gensler had approval for the meeting from the agency’s ethics team, no supporting documentation has been provided to substantiate the claim. Despite repeated requests for clarification, the SEC declined to comment further.

Critics argue that the SEC’s unwillingness to share all the relevant documentation related to the meeting raises concerns for investigators. Thomas Jones, president of the American Accountability Foundation, emphasized the importance of shedding light on such special-access meetings, highlighting the potential for abuses and the need for transparency.

Sources at the SEC indicate that commissioners typically use email to request meetings with the Ethics office in order to create a paper trail. The absence of written records raises suspicions, as one former SEC official stated, “What’s the point of doing it if it’s not in writing?” Another former counsel at the SEC expressed concern over the agency disputing the release of documents under the Freedom of Information Act without providing substantiation.

Gensler’s failure to undergo the proper vetting process for the meeting is particularly notable given the apparent conflicts of interest he faces in the case. It has been reported that Mark Wetjen, FTX’s former lobbyist and a close associate of Gensler, was responsible for arranging the meeting. Furthermore, Glenn Ellison, the father of Caroline Ellison, SBF’s ex-girlfriend turned informant, headed MIT’s economics department while Gensler was a professor there.

While it remains unclear whether the SEC was investigating FTX or Bankman-Fried at the time, sources close to the agency believe that the Ethics office would have advised against meeting with Bankman-Fried due to limited knowledge about the exchange and its non-U.S. headquarters.

Critics argue that Gensler’s decision to hold the meeting without seeking clearance reflects his operating style at the SEC. Observers have raised eyebrows over the timing of the SEC’s charges against Bankman-Fried, which were announced the day after he was extradited to the U.S. by the Department of Justice.

Lawmakers, including Congressman Ritchie Torres from New York and Chair of the House Financial Services Committee Patrick McHenry (R-NC), have criticized Gensler and called for more information on his correspondence with Bankman-Fried and the SEC’s relationship with FTX. Representative Thomas Earl Emmer (R-Minn.) characterized Gensler’s meetings as “working backroom deals with people doing nefarious things.” The controversy surrounding the meeting further intensifies the scrutiny on Gensler’s actions and the SEC’s handling of the FTX case.

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