U.S. House GOP Investigates SEC’s Gensler Over Allegations of Partisan Recruitment

Republican members of the U.S. House have initiated an inquiry into claims that SEC Chairman Gary Gensler may be appointing staff based on their political leanings, potentially breaching federal regulations.

In a letter dated September 10 addressed to Gensler—a member of the Democratic party—Republican Representatives Jim Jordan, Patrick McHenry, and James Comer leveled accusations against the SEC of favoring candidates from politically progressive organizations for key positions.

They referenced an exchange of emails disclosed during an SEC rulemaking process, suggesting that the hiring of the SEC’s director of trading and markets, Dr. Haoxiang Zhu, could have been swayed by his political views.

According to the letter, emails from May 2021 reveal Zhu expressing alignment with the political views favored by the SEC, leading to his appointment six months later on November 19, 2021. The lawmakers contend this indicates unlawful consideration of political ideologies in the hiring process.

The letter further argues that such practices, if proven, would constitute a violation of the Civil Service Reform Act, compromising the SEC’s claim to neutrality.

The legislators have demanded that Gensler provide all relevant documents and communications from April 17, 2021, concerning hiring and staffing for directorial and related roles, along with any evaluations of political affiliations or ideologies of the candidates.

Gensler has been given a deadline of 5:00 pm on September 24 to submit the requested information to the House Judiciary Committee, chaired by Representative Jordan.

No immediate response was available from the SEC regarding these allegations.

During his tenure, Gensler has notably increased enforcement actions against cryptocurrency firms, recording a peak in 2023 with 46 actions, a significant rise from 2021.

Former President Donald Trump, who is seeking a return in the upcoming presidential elections, has vowed to dismiss Gensler from his post on his first day if he is re-elected. SEC chairs typically step down with a change of administration.

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