The watchdog U.S. Government Accountability Office (GAO) will investigate recent changes in organization and practice at the SEC.
The GAO will review reductions in staff, the effort to end building leases and consolidate or reorganize SEC staff responsibilities, according to a Reuters story citing an April 8 letter to Democratic Senators Elizabeth Warren and Mark Warner, who requested the review.
“It is essential that Congress and the public understand how the Trump Administration’s recent actions have affected the SEC’s ability to carry out its mission and statutory obligations,” Warren and Warner wrote in a March 28 letter asking for the review.
Since the start of the Trump administration the SEC has launched several efforts to reduce the size of its staff, including the reported elimination of a number of regional director positions and a buyout that could result in a reduction of 10% to 15% of the agency’s total staff.
It has also announced plans to end the leases on several SEC regional-headquarters buildings and implemented major policy changes without public review including a reversal the SEC’s approach to cryptocurrency investment options and the decision to abandon the agency’s defense in federal court against lawsuits challenging the controversial climate-risk disclosure rule that was passed in March, 2024.
The changes were an effort to reverse the “overly ambitious” actions of the agency under the leadership of former SEC chair Gary Gensler, acting chair Mark Uyeda said during a March 7 financial-industry conference in New York.
Uyeda, who described the flurry of sudden changes and policy reversals as “methodical” promised later that month to deliver a blueprint listing steps the agency would take to reform its regulatory process to create a more stable, predictable regulatory environment.
Caroline Crenshaw, the only remaining Democratic SEC commissioner, has criticized the approach of the SEC under Uyeda as unilateral and autocratic for ignoring due process before initiating changes.
She criticized in particular the decision to abandon defense of the climate-risk rule as an illegal effort to dismantle an existing regulation for political reasons without the public notice, discussion and commission vote that would normally be required under the Administrative Procedures Act that defines how independent agencies can create and enforce regulations.
The ability of independent agencies to do their jobs is under threat from the Trump administration, which issued an executive order Feb. 18 requiring that agency heads their marching orders directly from the White House represents the advance of authoritarianism, not a return to a reasonable approach to regulation, according to a March 13 analysis in which Columbia Law School professors John Coates, John Coffee Jr., James Cox, Merritt Fox and Joel Seligman
The constant threat of mass firings, cutbacks and pressure to follow White House policy regardless of due process, they wrote, is akin to “watching the SEC face a death by 1,000 cuts.”
The power to review big changes at the SEC does fall within the scope of the GAO’s authority, according to the reply to Warren and Warner’s request in which a GAO official estimated a review would begin in approximately three months.
