Republican members of the US House have launched an investigation into Securities and Exchange Commission (SEC) Chair Gary Gensler, a Democrat, over claims that political bias may be influencing the agency's hiring practices.
On September 10, GOP lawmakers Jim Jordan, Patrick McHenry, and James Comer sent a letter to Gensler, raising concerns about the pattern of recruiting left-leaning individuals for senior roles.
The lawmakers claim that Dr. Haoxiang Zhu's hiring as the SEC's director of trading and markets was tied to his political views. In a May 2021 email, Zhu allegedly told Gensler he was "in the right place on the political spectrum" and was hired six months later.
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The letter asserted:
As this correspondence suggests, the SEC appears to be unlawfully considering an applicant's political ideology when hiring bureaucrats <...>. If these allegations are true, the SEC is violating the Civil Service Reform Act to fill the agency with employees who possess a particular ideology, which undermines the SEC's purported impartiality.
To address these allegations, the lawmakers have requested Gensler to provide documents and communications related to hiring practices within the SEC from April 2021 onward. This includes information regarding any consideration of political affiliations or ideology in the selection process for key roles at the SEC.
The deadline for Gensler to submit these documents to the House Judiciary Committee, chaired by Jordan, is set for September 24.
Gensler, who has been SEC Chair since 2021, has taken an aggressive regulatory stance, particularly in the crypto industry. The SEC ramped up enforcement actions against digital asset firms under his leadership.
The outcome of this probe could have lasting effects on the SEC's reputation.
