GOP lawmakers engaged with SEC watchdog on IT shop’s deletion of texts

House Republicans have had initial discussions with the Securities and Exchange Commission’s watchdog about its findings that nearly a year’s worth of texts from the former chair’s mobile device were erased.

In a letter sent last week to SEC Chair Paul Atkins, four GOP members of the House Financial Services Committee called for “further investigation” into a series of missteps by the agency’s IT shop that led to the deletion of Gary Gensler’s messages.

The SEC’s Office of Inspector General detailed in a report last month how text messages sent and received by the head of the SEC during the Biden administration between October 2022 and September 2023 were accidentally expunged from his government-issued device.

A GOP aide with knowledge of the matter told FedScoop on Tuesday that the House Financial Services Committee Republicans behind the letter have had “preliminary discussions with SEC OIG” and anticipate “further engagement when the government reopens.”

The letter was sent by committee Chair French Hill of Arkansas and Reps. Ann Wagner of Missouri, Dan Meuser of Pennsylvania and Bryan Steil of Wisconsin, who lead the Capital Markets, Oversight and Investigations, and Digital Assets, Financial Technology, and Artificial Intelligence subcommittees, respectively.

The HFSC chairs raised concerns in their letter about how the SEC handles IT, “particularly as it relates to its most senior officials.” The lawmakers focused specifically on the 62 days that Gensler’s phone was deemed “inactive” after losing connection with the agency’s mobile device management system.

An SEC policy enacted around that time called for the remote wiping of any agency-issued mobile device that hadn’t connected with the device management system for at least 45 days. Gensler arrived at work one day to find all SEC apps missing from his phone and quickly reached out to the regulator’s Office of Information Technology.

According to the OIG, the SEC’s IT personnel “hastily performed a factory reset of the smartphone, which resulted in the permanent deletion of the device’s data, including nearly a year’s worth of text messages.”

In their letter to the SEC, the committee Republicans questioned why OIT “made no attempt to investigate or address” the inactivity issue and why the office implemented a policy “that was ‘poorly understood’” and appeared to accord Gensler with “special treatment.” His device, the lawmakers contend, was wiped “more than two weeks after the wipe should have occurred.”

“Notably, even though the smartphone was wiped, it was still possible to retain former Chair Gensler’s information on the phone,” the lawmakers wrote. “However, OIT staff factory reset the smartphone resulting ‘in the permanent deletion of the device’s data, including nearly a year’s worth of text messages.’ This data loss was due to the fact that OIT had not backed-up former Chair Gensler’s device since October 18, 2022.”

The House Republicans aimed to connect the regulator’s IT slip-ups with the SEC’s lawsuits under Gensler that chided several financial firms for “widespread record keeping failures.” The lawmakers also noted a 2013 report from the Commodity Futures Trading Commission OIG, which found that Gensler, then the agency’s chair, had used his personal email for official agency communications. 

“Collectively, these incidents, along with the OIG’s findings, raise serious concerns about former Chair Gensler’s and OIT’s compliance with federal recordkeeping laws, transparency obligations, and the integrity of agency oversight,” the letter stated. “The Committee is engaging with the OIG to learn more about their report, seek clarity on outstanding questions, and discuss additional areas that require further oversight and investigation. The Committee looks forward to the Commission’s engagement and transparency during this process.”

An SEC spokesperson told FedScoop on Tuesday that due to the government shutdown, the agency’s public affairs office “is not able to respond to many inquiries from the press.”