Donald Trump May Not Be Able To Fire Gary Gensler, Here’s Why

As a seasoned legal analyst with extensive experience navigating the intricacies of U.S. government and regulatory structures, I find the potential implications of the upcoming election for SEC Chair Gary Gensler particularly fascinating. The legal precedents surrounding independent agency heads like Gensler offer a complex web that may shield him from immediate removal, even under a new administration.


As the U.S. prepares for potential changes after today’s election, there’s been discussion about the fate of SEC Chair Gary Gensler. Depending on whether a Donald Trump or Harris administration takes office, there are speculations about possible leadership changes at the agency. However, crypto attorney Dave Michaels has pointed out some legal complexities that might protect Gensler from an immediate dismissal.

Michael pointed out established judicial decisions providing distinct safeguards for leaders at autonomous institutions such as the SEC, suggesting the process of removing Gary Gensler might be difficult.

Donald Trump or Harris May Not Have Authority to Dismiss Gary Gensler

Michaels discussed on social media whether a new presidency could lead to Donald Trump or Kamala Harris dismissing Gary Gensler from his position as SEC Chair. He highlighted that a 1935 Supreme Court ruling in Humphrey’s Executor v. United States ensures the independence of agency heads like FTC commissioners, making it difficult for them to be dismissed due to personal preference by the president.

The implication of this decision, while specifically targeting the Federal Trade Commission, can frequently be seen to extend to the Securities and Exchange Commission too. This assumption arises from the fact that both entities perform comparable independent operations and oversee regulations.

The legal precedent indicates that leaders of independent agencies, such as Gary Gensler at the SEC, are generally secure in their positions and can’t be removed without valid reasons. This protection was put in place to shield regulatory heads from political manipulation and frequent executive changes. Consequently, even if Donald Trump were elected, the law does not provide him with the power to dismiss an SEC Chair on a whim to replace them with a favored candidate.

Michael underlined that such intricate legal system implies any effort to dismiss Gary Gensler without proper justification might lead to extended periods of legal disagreements.

The legal expert emphasized,

In a landmark Supreme Court decision in 1935 (specifically, Humphrey’s Executor case), the protection of an FTC commissioner from presidential removal was established. Although this ruling did not directly involve the SEC, it’s worth noting that the functions and independence of both commissions, from the executive branch, share striking similarities.

Yet, it’s worth mentioning that traditionally, Securities and Exchange Commission (SEC) chairs tend to resign when a different political party takes over the presidency. This allows the incoming administration to appoint a successor who shares their views. Michael’s observation suggests this pattern could potentially impact Gary Gensler’s decision if there is a change in leadership.

By choosing to step down, this action might facilitate a seamless shift in leadership, maintaining the Security and Exchange Commission’s (SEC) regulatory consistency. At the same time, it coincides with MetaLawMan’s forecast that Gensler may resign if Trump gets re-elected.

However, should Gary Gensler opt against resigning, President Trump might find himself with restricted choices. He may resort to indirect tactics, for instance by redistributing duties within the SEC.

Ripple Effect on SEC’s Enforcement Policies

Any potential change in SEC leadership could impact the regulatory approach to cryptocurrency. Under Gary Gensler, crypto firms’ compliance costs have exceeded $400 million due to intensified SEC enforcement actions. The aggressive regulatory stance has faced industry criticism. 

Most recently, former SEC official Marc Fagel criticized the agency’s sudden issuance of a Wells Notice to Immutable, an Ethereum-based gaming firm. He described the SEC’s abrupt approach as “risky,” noting that typically, companies receive extensive communication before such notices. Similarly, Consensys cited SEC scrutiny among factors leading to a 20% workforce reduction.

Currently, there’s chatter within the cryptocurrency community suggesting that former SEC Commissioner Dan Gallagher, now at Robinhood, might be tapped by Donald Trump for a role that could alter the Securities and Exchange Commission’s stance on digital assets. Many think his leadership would result in more transparent regulatory rules and encourage innovation in the crypto industry.

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2024-11-05 22:40