Some Securities and Exchange Commission law enforcement staff are accusing their boss Gary Gensler of being a publicity hound for his unusual disclosure of charges against influential celebrity Kim Kardashian earlier this week, FOX Business has learned. .
What angered law enforcement personnel — the lawyers who developed the case against Kardashian — was that Gensler appeared to take credit for the case solo and on national television. . He is also said to have embellished his prominence to gain publicity.
Kardashian, a billionaire reality TV star and marketer, has paid a fine for violating securities laws by failing to disclose that she earned $250,000 promoting the EthereumMax cryptocurrency on her Instagram page .
The case was far from the SEC’s biggest or most important in its crackdown on crypto, even though Kardashian’s name is getting a lot of attention. All of this makes Gensler’s rollout of the case — complete with a well-timed national TV appearance and the release of his own YouTube video — a ploy to get media attention, law enforcement officials said in a statement. anger lately.
Kardashian, for example, has not been charged with serious violations of securities laws. She did not trick investors by pumping EthereumMax and then dumping the token at a higher price.
Her only violation, according to the complaint, was her failure to disclose that she had received payment for her tout in an advertisement on her Instagram page.
“Do you like crypto????” she wrote, according to the Instagram post. “This is not financial advice, but I share what my friends just told me about the Ethereum Max token. A few minutes ago, Ethereum Max burned 400 trillion tokens, literally 50% of their administration portfolio giving back to the entire E-Max community.”
She ended her ad with hashtags, including one revealing that it was actually an ad (“#AD”).
Without admitting or denying wrongdoing, Kardashian shelled out more than $1.26 million to settle the case. She also agreed to stop promoting crypto for three years and to cooperate with the commission’s ongoing investigation into issues with the digital token.
Kardashian is worth around $1.8 billion, according to Forbes.
SEC staffers point out that former SEC chairmen held press conferences surrounded by law enforcement personnel when announcing high-profile actions. Most of their public appearances involved speeches on general issues, testimony in Congress, or occasional television interviews to explain their agenda.
Gensler, according to law enforcement officials, went even further. He has his own segment on the official SEC YouTube channel titled “Office Hours with Gary Gensler”, where he promotes various issues he deems important (one episode was titled “The Basics of Investing”) and is a accustomed to the television circuit of financial information. .
Many on the committee believe Gensler is looking to polish his resume for a more senior position in the Biden administration, such as treasury secretary if Janet Yellen steps down, as expected after this year’s midterms. Proponents say he is simply trying to keep small investors informed about potential scams and risky crypto investments that are increasingly being touted by celebrities.
Still others say Gensler made crypto regulation an important focus of his tenure with the SEC after being appointed by Chairman Biden in early 2021. He seeks to consolidate the SEC’s authority over cryptography – a growing business that government officials say involves significant fraudulent activity – which many believe should be regulated by the Commodity Futures Trading Commission.
“I think the SEC wants to show that they’re the ones protecting retail investors who vote against shrewd investment plans — in part to argue that they should at least have equal jurisdiction with the CFTC,” he said. Columbia law professor John Coffee. “Never underestimate the intensity with which turf wars are fought in Washington.”
An SEC spokesperson declined to comment on this report; Kardashian’s attorney could not be reached for comment.
Law enforcement personnel, however, say the disclosure of the Kardashian case is a perfect example of Gensler’s ways of seeking the spotlight.
There was no press conference with Gensler surrounded by the attorneys who worked on the case. The press release and settlement documents were posted on the SEC’s website Monday at 7:30 a.m. EDT; Gensler tweeted at 7:50 a.m. that he would appear on cable financial news channel CNBC to discuss the details.
Committee members believe he leaked details of the case well in advance to CNBC, unbeknownst to most law enforcement officials, as the network also timed the latest perfectly. news of the case a few seconds after 7:30.
They were also angered by a YouTube video Gensler produced without their knowledge and tweeted to his followers at 7:30 a.m. EDT. Without mentioning Kardashian by name, he issued a warning about believing the hype of celebrity endorsements when it comes to risky investment products like crypto.
“A celebrity or influencer’s incentives may not necessarily align with yours. We might enjoy watching a celebrity play on a basketball court, perform in a reality TV show or movie, or perform in front of a large crowd at a stadium show. We should ‘But don’t confuse these skills with the very different skills needed to offer proper investment advice. Before you invest, please do your research,’ he said. -he declares.
“This stuff is pretty unprecedented in terms of promotion,” said a former senior SEC official who said he heard complaints from staffers about how Gensler promoted the Kardashian case. “SEC chairmen usually hold press conferences on big issues surrounded by the people who did the actual work,” another former SEC official told Fox Business.
Of course, SEC staffers can’t do anything but quit the commission, and they did. Fox Business has previously reported SEC executives with nearly 50 years of experience resign under Gary Gensler’s tenure that several senior officials and more than a dozen staff members have stalled the enforcement division in recent months because of Gensler’s blunt management style and aggressive, progressive agenda.
More line staff are said to be seeking jobs in the private sector. The Enforcement Division, as one former SEC official now in private practice put it, is “hemorrhaging people.”