Many are calling for the removal of Gary Gensler as SEC Chair: Here’s what it takes for that to happen
The SEC was recently ordered to pay almost $1.8 million to Debt Box after a judge ruled it abused its power. With Gary Gensler at the helm, many are calling for his removal.
- To remove Gary Gensler, there would need to be an impeachment, and the US president would have to elect a new Chair.
- Under FIT21, the SEC regulates assets and securities if the blockchain is functional but not decentralized.
- As Chair of the SEC, Gensler is responsible for overseeing the agency’s approximately 4,500 staff members.
An ex-SEC staffer was approached by Fox Business journalist Eleanor Terrett to explain what it would take to remove the head of an independent agency. Two scenarios to hypothetically replace the SEC Chair (currently Gary Gensler) were presented: impeachment and the US President naming another Chair.
The SEC is also unique because it can still function with less than five commissioners until they are filled. When a Chair is impeached, they are removed from office and may no longer serve as commissioner.
How to Remove Gary Gensler as SEC Chair
The first step of removal is a formal impeachment process including the following steps:
- House of Representatives brings charges of impeachment against an official.
- A majority vote is needed to impeach the official.
- The impeachment trial is held by the Senate.
- If found guilty, the official is removed.
- The removed official may never hold elected office again.
The US President also has the power to name another commissioner as Chair, meaning at any time, Gary Gensler can be replaced should the President decide. Here are possible scenarios for the SEC:
- Full SEC Commission — A complete five-member commission with one Chair.
- Minimum SEC Commission — The structure is still the same: there must be a minimum of three commissioners, with one Chair, and two other members.
- Special Scenario — If only two members remain, the quorum will consist of the number of members in office.
During then-President Obama’s term, there were only three of five SEC commissioners with the former President nominating two new ones, Hester Peirce and Lisa Fairfax, but awaited Senate confirmation. The SEC commissioners have to be approved by the President and confirmed by the Senate.
What is the Job of the SEC Chair?
The SEC Chairman serves a five-year term but may extend up to 18 months after if a successor hasn’t been appointed and confirmed. The Chair is responsible for overseeing all executive and administrative functions of the agency, including its six divisions:
- Corporation Finance — Oversees disclosures and transaction registrations of public companies.
- Economic and Risk Analysis — Collects and uses economic data to advise other divisions.
- Enforcement — Investigates violations of securities laws.
- Examinations — Conducts the SEC’s National Exam Program
- Investment Management — Oversees investment companies and advisers
- Trading and Markets — Oversees self-regulatory organizations like investment houses and broker-dealer firms.
The Chair’s is to supervise approximately 4,500 staff members in 6 divisions, and 25 offices in Washington and 11 regional locations. The recently passed FIT21 defines the SEC and CFTC’s regulatory oversight.
- CFTC — Regulates digital assets if the associated blockchain or digital ledger is both functional and decentralized.
- SEC — Regulates assets and securities if the blockchain is functional but not decentralized.
Current SEC Chair Gary Gensler
Gary Gensler held the following positions:
- Assistant Secretary of the Treasury for Financial Markets — 1997 to 1999
- Treasury for Domestic Finance’s Under Secretary — 1999 to 2001
- Commodity Futures Trading Commission (CFTC) Chairman — 2009 to 2014
- Securities and Exchange Commission (SEC) Chairman — 2021
Gensler also worked at Goldman Sachs for 18 years as co-head of finance and was Hilary Clinton’s CFO in her 2016 presidential campaign.
Compilation of the Actions of and Against Gary Gensler
- Under Gary Gensler, the SEC was ordered to pay almost $1.8m to Debt Box for the agency’s abuse of power.
- Strongly opposed the FIT21, which would create regulatory limits to the SEC’s oversight.
- Said cryptocurrencies are small but are a significant source of fraud.
- The SEC launched a campaign to classify Ethereum as a security.
- In 2023, the SEC saw a 53% yearly increase in actions against crypto firms.
- Voted in favor of the spot Bitcoin ETFs.
- US Senators demanded a report from the SEC Chair regarding an X account breach, which led to the premature announcement of the spot Bitcoin ETFs.
- US Congressman Warren Davidson suggested Gensler be dismissed in 2024, mentioning the SEC’s “corruption.”
- Dropped its lawsuit against Ripple after accusing them of illegally raising over $1.3 billion in unregistered securities offering through the sale of XRP.
- Told CNBC that FTX could be revived under new leadership.
- In 2019, before he became Chair, he said he didn’t think a spot Bitcoin ETF would exist.
- Said the majority of cryptocurrencies fall under the investment contract test, making them subject to securities laws.
- Gensler was questioned by US lawmakers and FINRA President and CEO about how Prometheum got its approval as a crypto broker-dealer.
- Requested an additional $72 million in funding in 2013, saying the crypto industry was full of “fraud, scams, and abuse.”
- The SEC Chair drew parallels between Binance and FTX, filing a lawsuit against Binance but no lawsuit against FTX.
- Gensler said launching decentralized networks would require native tokens but considered them “illegal securities.”
- Publicly stated all Proof-of-Stake tokens are securities.
- Binance tried to hire Gary Gensler as an adviser in 2018 but was declined.
- Said every cryptocurrency except Bitcoin was a security, falling under the SEC’s jurisdiction.
