Republican lawmakers Jim Jordan, Patrick McHenry and James Comer in the US House of Representatives have launched an investigation into SEC Chairman Gary Gensler, alleging that he appointed commissioners based on political affiliations. These allegations are alleged to be in violation of federal regulations. However, experts say that the investigation is essentially a political stunt and is aimed at making nice with the cryptocurrency industry.
Police-Headed Responses
Todd Phillips, a law professor at Georgia State University, described the letter sent by lawmakers to Gensler as a press release. The letter alleges violations of the 1978 Civil Reform Act and requests the production of correspondence regarding the hiring of SEC employees. Phillips said the cryptocurrency industry is against Gensler and that this investigation is a gesture towards the industry.
Are Political Appointments Legal?
The letter alleges that the appointment of SEC Director of Trading and Markets Dr. Haoxiang Zhu was politically motivated. However, according to Guo Xu of UC Berkeley, the position can be a political appointment at the discretion of the president, and Plum Book notes that the position qualifies as a political appointment. Phillips says Zhu’s emails to Gensler appear harmless, and that ideological views can be taken into account in hiring processes.
What Will Happen in the Future?
Gensler is required to provide Republican lawmakers with SEC correspondence on hiring, firing and transfer decisions. But making those documents public is a matter for lawmakers to decide. Phillips said the current evidence is insufficient to warrant any enforcement action, but that could be affected if the political climate changes.
Roger Nober of George Washington University said that the executive branch has also become politicized in recent years and that the situation could change depending on the outcome of the presidential election. Trump has promised to prosecute his political opponents if elected. However, Gensler is not considered to be high on Trump’s priority list.
Experts say it’s unlikely the Justice Department or any other law enforcement agency would open such an investigation under the current administration, and Phillips said the current investigation is unlikely to lead to a serious recommendation or prosecution.
Disclaimer: The information contained in this article does not contain investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
