FOIAengine Finds SEC Chair in a Harsh Spotlight
You’ve probably seen Rep. Patrick McHenry (R-NC), whether you know it or not. For a few weeks last month, he was one of the most recognizable, least known lawmakers on Capitol Hill.
Professorial mien. Bow tie. Cool and calm. Yes, now you remember. McHenry was a ubiquitous presence at the rostrum and on the cable networks during the drawn-out October debate over who would succeed Rep. Kevin McCarthy (R-Calif.) as Speaker of the House. The 48-year-old chair of the House Financial Services Committee was McCarthy’s choice to take the gavel. And McHenry received high marks for his statecraft, steering his caucus to its eventual selection of a new speaker.
A few weeks earlier, it was a different McHenry who showed up to chair his committee’s oversight hearing about the Securities and Exchange Commission – and to publicly ridicule the SEC’s chairman, Gary Gensler.
McHenry quickly made it clear he’s not a fan. And he’s not alone. An internet petition calling for Gensler’s resignation (“for obstruction of justice and collusion with FTX”) had 34,643 signatures as of a few days ago.
“Normal Congressional oversight,” McHenry said at the start of the September 27 hearing. But the dressing down he gave Gensler was anything but that. Questions posed to the SEC seven months earlier – including about Gensler’s two meetings with Sam Bankman-Fried, before the fall of FTX – hadn’t been answered. That was “disgraceful. . . . Our patience is wearing thin.”
McHenry added, in a huff: “The committee has not received a single non-public document that was not part of a FOIA production.”
Did we hear that right? Yes. We’ll come back to it.
It’s unusual for a congressional committee to be forced into relying on documents produced under the Freedom of Information Act to learn what an agency is up to. But that’s what McHenry was telling Gensler, right before threatening to become “the first chairman of this committee to issue a subpoena to the SEC.”
The hearing made for great social media click bait: Videos soon were posted on You Tube and X, formerly known as Twitter, showing McHenry and other Republican committee members pounding away as Gensler calmly ducked, dodged, and dissembled.
After the hearing, the official X.com account of the committee’s Republican majority posted a three-minute highlight reel that’s been viewed 582,000 times. A You Tube personality posted a 24-minute blow-by-blow (73,000 views so far) headlined “Gary Gensler DESTROYED by Congress.”
Then came a Wall Street Journal editorial: “What is Gary Gensler Hiding?”
And two weeks after that, a conservative group called Consumer Action for a Strong Economy spent mid-six-figures to buy ad time on the Sunday morning talk shows, including NBC’s “Meet the Press.” The ad contained 60 seconds of drama from McHenry’s hearing the month before, and ended with the same message: “SEC Chair Gensler: Answer Congress’ Questions About Your Meetings with SBF.”
Gensler, who has fans in Congress’ progressive wing but not, apparently, on the right, knew all this was coming. The day before the oversight hearing, a bipartisan group of 16 Democrats and 16 Republicans, including McHenry, sent him a stinging letter that criticized the Commission’s major rulemaking initiatives. The letter cited Justice Department criticism of the agency, as well as an SEC Inspector General’s finding that even the SEC’s own staff “are increasingly concerned about the aggressive agenda and shortened comment periods.”
We wondered whether all that negative attention would move the FOIA needle. So we dug into PoliScio Analytics’ competitive-intelligence database FOIAengine, which tracks FOIA requests in as close to real-time as their availability allows, to see whether the bad publicity translated into more information demands.
The answer: Over the roughly two-and-a-half years of Gensler’s tenure at the SEC, the FOIAengine database counts 238 FOIA requests to the SEC that specifically mention him. One-tenth of those were logged in the four weeks following McHenry’s hearing.
Numerous requests were made in the name of an investigative columnist for The Daily Signal, a conservative news site run by the Heritage Foundation. Those requests were exhaustive, seeking, among other things, “Gary Gensler’s full calendar, flight logs, congressional correspondence and communications to/from congressional offices or committees for the previous month including responses or document productions to outstanding, extant, or previous congressional inquiries or oversight efforts.”
Also, as to Gensler, “all background materials, briefs, notes, or supplemental materials that were used in the preparation of statements made on the record or during public press conferences or events open to the public. All communications to/from the following email domains: @eop.gov, @who.eop.gov, and @ovp.eop.gov. All communications sent via email, SMS, Microsoft Teams, or Slack mentioning ‘policy draft’, ‘updated policy’, ‘Bankman-Fried’, ‘FTX’, or ‘liquidity’.”
Another FOIA request came from Rebecca Ungarino, a senior finance reporter at Business Insider and co-author of an October 19 article about risky data-center investments by Blackstone (NYSE: BX). She submitted multiple Blackstone-related FOIA requests on the day her story ran. One of her requests sought communications between Gensler and anyone at Blackstone.
There was also an unusual request from the Democratic National Committee, throwing out a dragnet for any emails since 2014 between SEC officials, including Gensler, and anyone at pharmaceutical company Roivant (NASD: ROIV). The DNC’s FOIA request came six days before UK-based Roivant, with about $100 million in annual revenue, reported selling one of its subsidiaries to pharma giant Roche (OTC: RHHBY) for $7.25 billion. FOIA requests from the DNC aren’t uncommon, but they typically are candidate-focused opposition-research queries. This request was different.
Amid all the theatrics and subsequent fallout, Gensler somehow maintained his cool, even when Rep. Ritchie Torres (D-N.Y.) facetiously asked him during the hearing whether a Pokémon card was a security. (Answer: Not if it’s bought in a store. But if it’s tokenized? “I’d have to know more.”)
Gensler sat patiently throughout hours of blistering questioning and returned repeatedly to a quotable sound bite when it came to regulating cryptocurrency: “This is a field that is rife with fraud and manipulation, and I’m looking after the American investors who’ve been hurt by the crypto fraudsters and scammers.” After Gensler had fallen back on the “rife with abuse” line a few times, one of the committee members could be heard whispering on an open mike: “That’s all he says.”
Still, Gensler showed he hadn’t lost his sense of humor.
During the hearing, Rep. Tom Emmer (R-Minn.) alluded to Gensler’s wealth – a net worth that could exceed $100 million. Emmer wanted to score his point: Gensler, 66 years old and once a partner at Goldman Sachs, still favored big banks over innovative smaller players.
“Is it correct to say,” Emmer asked, “that you made most of your personal wealth directly through your employment at Goldman Sachs?”
Gensler didn’t miss a beat.
“I’ve done well since then, too, sir,” the chairman said with an impish grin.
There was laughter in the gallery.
Next: Another short seller, using FOIA.
John A. Jenkins, co-creator of FOIAengine, is a Washington journalist and publisher whose work has appeared in The New York Times Magazine, GQ, and elsewhere. He is a four-time recipient of the American Bar Association’s Gavel Award Certificate of Merit for his legal reporting and analysis. His most recent book is The Partisan: The Life of William Rehnquist. Jenkins founded Law Street Media in 2013. Prior to that, he was President of CQ Press, the textbook and reference publishing enterprise of Congressional Quarterly. FOIAengine is a product of PoliScio Analytics (PoliScio.com), a new venture specializing in U.S. political and governmental research, co-founded by Jenkins and Washington lawyer Randy Miller. Learn more about FOIAengine here. To review FOIA requests mentioned in this article, subscribe to FOIAengine.
Write to John A. Jenkins at JAJ@PoliScio.com.