Senate Republicans want the SEC should explain why the staff is leaving the country’s corporate watchdog at the most elevated rate in 10 years amid a whirlwind of proposed rules, according to a letter seen by the media on Sunday.
The confidential letter dated Oct. 27 from Senate Republicans to the chair of the Securities and Exchange Commission, Gary Gensler, adds to the mounting analysis that the U.S. regulator lacks the internal capability it needs to achieve its ambitious rulemaking plans.
Gensler, a veteran Wall Street regulator who was chosen by President Joe Biden, a Democrat, has previously clashed with Republicans over the watchdog’s proposals on corporate climate-related disclosures. Gensler has recently contended that his new rules are critical to ensuring the U.S. capital markets remain the global “gold standard.”
Republicans have claimed he has overstepped his authority and adopted a hostile stance toward the monetary industry. The SEC has presented 26 new rule recommendations in 2022, over than double the number in 2021 and the most elevated total of any year in the last five years, the Republican letter says.
The letter, signed by six of the 12 Republicans on the Senate Banking Committee, references a public Oct. 13 report posted on the SEC’s website from the Office of the Inspector General, the SEC’s own internal watchdog, detailing staff attrition and reports of discontent.
Republicans want Gensler to explain how he will address the concerns in the report and also to allow more time for industry feedback on the new rules. The SEC was not immediately available for comment. Employees interviewed for the internal watchdog report said they received little feedback on rules they had written, according to the report.
Staff feared an increased risk of litigation because of shortened industry comment periods, the report said. The SEC is losing workers at its highest pace in 10 years, said the Inspector General’s report. The agency expected attrition in senior officer positions to be 20.8% this fiscal year and 8.4% for attorney positions, it said.
The letter concludes that “efforts to ram through hurried rulemaking without proper analysis, deliberation or consideration of downstream negative impacts are nothing short of regulatory malpractice.”
Senate Republicans Thom Tillis from North Carolina, Mike Crapo from Idaho, Tim Scott from South Carolina, Michael Rounds from South Dakota, Bill Hagerty from Tennessee, and Steve Daines from Montana signed the letter.