The Securities and Exchange Commission’s watchdog says nearly a year of text messages from former Chair Gary Gensler, who led the agency under President Joe Biden, were permanently lost because of a series of avoidable technology failures.
A report released Thursday said Gensler’s government-issued smartphone stopped communicating with the SEC’s device management system in July 2023. The problem went unnoticed, and in August 2023, the agency’s Office of Information Technology implemented a new “45-day wipe” policy for devices flagged as inactive.
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On Sept. 6, 2023, the policy triggered a wipe of Gensler’s phone. Staff then performed a factory reset, erasing text messages and operating system logs. The device had not been backed up since Oct. 18, 2022, leaving messages from nearly a year unrecoverable.
The inspector general found the episode was “avoidable,” citing missed alerts, inappropriate use of emergency change procedures, lack of backups, and insufficient coordination with the vendor over known technical issues.
Investigators reviewed about 1,500 messages recovered from colleagues and other records. They determined that the majority were federal records, including administrative scheduling and substantive discussions. Some exchanges involved enforcement actions against crypto platforms, settlement talks with a major financial institution, and coordination with the White House on a commissioner appointment.
The watchdog concluded that many unrecovered texts likely included federal records that should have been preserved under the SEC’s “Capstone” program for senior officials. The loss, the report said, may also affect the SEC’s ability to respond to Freedom of Information Act requests.
The SEC has since disabled text messaging on most government-issued devices, notified the National Archives of the lost records, and agreed to implement five reforms recommended by the inspector general. These include stronger oversight of device wipes, improved log retention, verification of backups for senior officials, and management approval before any future factory resets. Implementation deadlines extend into early 2026.
An SEC spokesperson said Chairman Paul Atkins, who succeeded Gensler in 2024, directed a comprehensive review after being briefed.
“When Chairman Atkins was briefed on this matter, he immediately directed staff to examine and fully understand what occurred and to take steps that will prevent it from happening again,” the spokesperson said in a statement provided to the Washington Examiner. “Transparency is paramount. Taxpayers and those regulated by the Commission must have full confidence in our work.”
Gensler, who left the SEC after Biden’s term, was known for an unusually hard-charging enforcement posture that made him unpopular with large swaths of industry. Under his leadership, the agency levied billions of dollars in fines against banks and brokerages for failing to properly preserve “off-channel communications” like WhatsApp and Signal messages.
He also pursued sweeping regulatory proposals targeting cryptocurrency, climate disclosure, and private equity, initiatives that drew intense opposition from Wall Street, Republican lawmakers, and even some Democrats.
House Republicans had already questioned Gensler’s record-keeping practices. In June 2023, committee leaders accused him of failing to adequately document meetings with outside groups and of sidestepping congressional oversight requests.
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The inspector general did not allege misconduct by Gensler in connection with the lost texts, but the report underscores how a breakdown in the SEC’s own record-keeping coincided with a period when Gensler was enforcing those same standards on industry.