A Year of Gensler’s Texts Wiped by Avoidable IT Errors, Raising Questions About SEC Oversight

The Office of Inspector General (OIG) at the U.S. Securities and Exchange Commission (SEC) has released a report attributing the loss of nearly a year’s worth of text messages from former SEC Chair Gary Gensler to “avoidable errors” by the agency’s IT department. The messages, spanning from October 2022 to September 2023, were permanently erased when an automated policy was implemented, triggering a device wipe on Gensler’s government-issued smartphone. The OIG report further highlighted shortcomings in change management, the absence of proper backups, and unaddressed software vulnerabilities as key contributing factors to the incident [1].

The report underscored that some of the lost messages were linked to critical communications regarding the SEC’s enforcement actions against crypto-related entities. These included discussions with the Director of the Division of Enforcement about potential legal actions against certain crypto asset trading platforms and their founders. As a result, the OIG concluded that the deletion of these texts could obscure important details of the SEC’s decision-making process during a pivotal period in the cryptocurrency market [1].

In response to the findings, the SEC has since taken several corrective measures, including disabling text messaging on most agency-issued devices, notifying the National Archives and Records Administration of lost records, and initiating enhanced backup protocols for senior officials' devices. The agency has also introduced training focused on records management for high-ranking officials, as part of broader efforts to improve transparency and accountability [1].

The incident has drawn public scrutiny, particularly within the cryptocurrency industry. Observers noted that the loss of these messages occurs amid heightened regulatory activity from the SEC under Gensler’s leadership, including a record number of enforcement actions in 2023. The OIG’s report comes as the SEC continues to refine its regulatory approach toward digital assets, including the potential introduction of new rules that may provide clearer guidance for the market [1].

The OIG also provided a series of recommendations to prevent future incidents, including the need for updated policies to ensure thorough documentation of system changes, regular device inventory checks, and improved log retention for after-the-fact investigations. Additionally, the report urged the IT department to establish procedures for verifying device backups and to ensure that high-level officials’ devices receive appropriate safeguards during troubleshooting [2].

As the agency moves forward, the loss of Gensler’s messages highlights the challenges institutions face in balancing technological advancement with data security and record-keeping compliance. The situation serves as a cautionary tale for federal agencies tasked with managing sensitive information in an increasingly digital environment [1].

Source:

[1] SEC Report Faults Errors For Loss Of Gensler's Texts (https://cointelegraph.com/news/avoidable-errors-led-to-the-loss-of-gary-gensler-text-messages-sec)

[2] Avoidable Errors Led to the Loss of Former SEC Chair ... (https://www.oversight.gov/reports/special-review-avoidable-errors-led-loss-former-sec-chair-gary-genslers-text-messages)