Members of the United States House of Representatives are actively seeking ways to remove Gary Gensler, the Chair of the Securities and Exchange Commission (SEC). However, the legalities surrounding this endeavor are far from straightforward.
On June 12, Representative Warren Davidson from Ohio introduced the SEC Stabilization Act, which aims to terminate Gensler’s tenure. Appointed in April 2021, Gensler’s term as the head of the commission is expected to conclude in 2026.
While Davidson has levied severe allegations of misconduct and abuse of power against Gensler, dismissing an independent agency official appointed by the U.S. President and confirmed by the Senate presents significant legal challenges. Although U.S. presidents can apply subtle political pressure or request the resignation of an SEC commissioner, it remains uncertain if they possess the sole authority to terminate their employment.
According to reports, at least one legal expert has stated that removing an SEC official necessitates specific grounds. A Supreme Court ruling in 2010 established that commissioners could only be removed by the president in cases of inefficiency, neglect of duty, or malfeasance.
While cabinet secretaries serve “at the pleasure of the president” and can be dismissed at any time, the expulsion of fellow lawmakers by members of Congress requires a two-thirds majority vote, an exceedingly rare occurrence in U.S. history, having transpired only 20 times.
Gensler has faced mounting criticism from the cryptocurrency community and certain legislators, primarily due to the recent SEC lawsuits against Binance and Coinbase. These lawsuits accuse the platforms of offering unregistered securities, with the commission now identifying approximately 68 cryptocurrencies as unregistered securities.
Representative Davidson initially proposed the anti-Gensler legislation in April in response to a tweet by Paul Grewal, Chief Legal Officer of Coinbase. If enacted, the SEC Stabilization Act would bring significant changes to the commission, including the addition of a sixth member and the redistribution of certain authorities from the chair to the commissioners.