Members of the United States House of Representatives have recently taken steps to remove Securities and Exchange Commission (SEC) Chair Gary Gensler from his position.
However, the legality of such a move is not as straightforward as it may seem. In this article, we delve into the complexities surrounding the proposed legislation and explore the challenges faced in removing an independent agency official.
Ohio Rep. Warren Davidson introduced the SEC Stabilization Act on June 12, aiming to oust Gensler from his role.
Gensler, who assumed the position in April 2021, is expected to serve as the SEC chair until 2026. Let’s examine the legal considerations associated with this proposed action.
While Rep. Davidson leveled serious allegations of misconduct and abuse of power against Gensler, the removal of an independent agency official, who is nominated by the U.S. president and confirmed by the Senate, is a complex matter.
Unlike cabinet secretaries who serve at the pleasure of the president and can be asked to leave at any time, independent agency officials have certain protections in place.
Legal experts suggest that removing an SEC official requires a justifiable cause. A 2010 Supreme Court decision established that commissioners could not be dismissed by the president unless there are specific circumstances, such as “inefficiency, neglect of duty, or malfeasance.”
In rare cases, members of Congress have the power to expel fellow lawmakers through a two-thirds vote. However, this approach has been employed only 20 times in the entire history of the United States. Removing an SEC chair through congressional expulsion would be an extraordinary occurrence.
Recent actions taken by the SEC under Gensler’s leadership have drawn criticism from the cryptocurrency community and some lawmakers.
The SEC filed lawsuits against major exchanges Binance and Coinbase, alleging the offering of unregistered securities. The commission now identifies approximately 68 cryptocurrencies as unregistered securities, which has intensified tensions.
