Lawmakers introduce bill to remove SEC chair — but do they have the authority?

A Supreme Court decision ruled that the U.S. president could not remove commissioners except for “standard of inefficiency, neglect of duty, or malfeasance.”

Members of the United States House of Representatives are pushing for ways to remove Securities and Exchange Commission (SEC) Chair Gary Gensler from his position, but the legality may be more complicated than a single piece of legislation.

On June 12, Ohio Rep. Warren Davidson introduced the SEC Stabilization Act with the expressed intention of firing Gensler. The SEC chair has served as head of the commission since being sworn into office in April 2021, with a term expected to end in 2026. 

While Davidson made serious allegations against Gensler for misconduct and abuse of power, removing an independent agency official nominated by the U.S. president and confirmed by the Senate is no small matter. For example, while U.S. presidents can ask an SEC commissioner to resign or apply subtle political pressure to do so, it’s possible they do not have the sole authority to fire one.

At least one legal expert has reportedly claimed that forcing an SEC official to leave requires some cause. A 2010 Supreme Court decision ruled that commissioners could not be removed by the president except for certain circumstances, qualifying as “standard of inefficiency, neglect of duty, or malfeasance.”

Other officials, like cabinet secretaries, serve “at the pleasure of the president” — i.e., they can be asked to leave at any time. Members of Congress can also expel fellow lawmakers with a two-thirds vote, though this approach is so rare it has happened only 20 times in the entirety of U.S. history. 

Gensler has incurred the increasing ire of many in the crypto space — as well as some lawmakers — over the last week following the SEC filing separate lawsuits against Binance and Coinbase for allegedly offering unregistered securities. The filings included several tokens the commission now considers unregistered securities, bringing the SEC’s total to roughly 68 cryptocurrencies.

Related: SEC’s Gensler offered to serve as an adviser to Binance in 2019: Lawyers claim

Davidson proposed the anti-Gensler legislation in April in response to a tweet from Coinbase chief legal officer Paul Grewal. The SEC Stabilization Act, if signed into law, could restructure the commission to add a sixth member — the body currently has four commissioners and one chair — as well as shift certain authority from the chair to the commissioners.

Cointelegraph reached out to the SEC but a spokesperson declined to comment.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Update (June 12 at 8:41 PM UTC): This article has been updated to include a response from the SEC.