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Gensler blasted by House Republicans over lack of Bankman-Fried details

Policy • April 13, 2023, 6:19PM EDT | The Block

Quick Take

  • House Republicans want to know more about the lead up to the Securities and Exchange Commission’s charges against FTX owner Sam Bankman-Fried. 
  • Two senior Republicans on a panel that will hear SEC Chair Gary Gensler’s testimony next week say that the agency has yet to provide them the information they want. 

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Securities and Exchange Commission Chair Gary Gensler is being threatened with a subpoena if the regulator doesn’t provide information related to charges brought against Sam Bankman-Fried.

House Financial Services Committee Chair Patrick McHenry and Bill Huizenga, the head of that committee’s oversight panel, want the staff memo recommending charges for Bankman-Fried as well as other information related to the charges filed by the agency against the failed crypto mogul, who has also been criminally-charged by U.S. prosecutors.

The Republicans first sent an inquiry on Feb. 10 asking for more details on the the lead up to Bankman-Fried’s civil charges by the SEC and argue they’ve been stonewalled since then. If the SEC does not provide information ahead of Gensler’s scheduled appearance before their committee next week they say they will consider a “compulsory process” to secure it, likely through a subpoena to the agency. 

The congressional probe relates to the timing of Bankman-Fried’s arrest, which occurred the night before he had agreed to testify before the House committee alongside caretaker FTX CEO John Ray III in December. Both Democrats and Republicans on the committee voiced frustration at the time over losing a chance to grill Bankman-Fried, particularly after the high-profile negotiation to secure his appearance before the committee, which does not have the ability to compel nongovernmental witnesses to testify. 

“Ignoring the deadline, the SEC actively impeded Committee staff from discussing the request with anyone in the Office of the General Counsel until Chairman Huizenga formally requested a conversation with the SEC General Counsel,” their letter to the SEC reads. “The subsequent staff level conversations have yet to yield any of the requested documents.”

Communications related to Bankman-Fried

The Republicans claim that the SEC Chair and his staff have failed to produce the information they’ve requested, which includes all communications in the SEC’s Enforcement Division related to Bankman-Fried from the time of the FTX collapse to his indictment, as well as records related to communications between the agency and the Justice Department related to their coordination on civil and criminal charges filed against Bankman-Fried. 

The latest letter from McHenry and Huizenga, sent Thursday, details a briefing by SEC staff and 232 pages of publicly available documents that the Financial Services Committee members say lacked the details they want. The congressional Republicans continue to push for the memo recommending civil charges against Bankman-Fried, which could also provide more details on the timing of that complaint as well as the criminal charges brought against the FTX and Alameda Research owner.

McHenry and Huizenga have set a new deadline for the SEC to provide its charging recommendation memo by 5 pm ET on Monday, April 17, the evening before SEC Chair Gary Gensler will testify before the House committee that the Republicans sit on. 

“Failure to produce the requested information could result in the Committee considering using compulsory process, if necessary, to obtain the requested information,” the pair say in the letter, threatening to subpoena the memo if the SEC does not provide that information.