A federal review by the SEC's Office of Inspector General found that former Securities and Exchange Commission Chair Gary Gensler lost nearly a year of text messages due to an automated IT action. The messages, sent and received between October 18, 2022, and September 6, 2023, were erased by an "enterprise wipe" triggered by the SEC's Office of Information Technology in August 2023.
The OIG report stated that the device had not been backed up during that interval, and routine alerts and change controls were missed or ignored. The wipe was deemed avoidable and resulted from weak change management, failures to address vendor software flaws, and a lack of timely backups, leaving key messages unrecoverable.
House Republican leaders, including from the Financial Services Committee, have launched an inquiry, writing to SEC Chair Paul Atkins for details. They accuse the SEC of a double standard, noting that in fiscal year 2023, the agency collected over $400 million in penalties from firms for recordkeeping failures, while the agency itself failed to meet similar standards.
The deleted texts included communications related to enforcement actions against crypto companies and other high-profile matters, which could impact litigation and Freedom of Information Act requests. Critics argue that Gensler's SEC weakened the crypto sector through numerous lawsuits.
The SEC has acknowledged the failures and is implementing corrective measures to improve system controls and backup processes. Lawmakers may pursue additional oversight or hearings based on the findings.
