You will recall that a few weeks ago I posted Trump pledges to fire SEC Chair Gary Gensler: Does the President have the power to do so? I got an email today from a reporter asking "Are you sure he really could remove him from chairmanship?"
I am not "really sure" Gensler can be removed from his position as SEC chair. But I am pretty sure at about a 95% confidence level. It has never been done, but as I explained in the original post the consensus view (that I share) is that the Chair serves as such at the pleasure of the president.
Whether Trump can fire Gensler from his position as a member of the Commission is a separate question. No member of the Commission has ever been fired by a President. (The technical term is removed.) At least one member (former Chairman Harvey Pitt) was subjected to so much pressure that he resigned as both Chair and a Commissioner, but none has ever been removed by a President.
The legal issue is actually quite complex. The foundational case on this issue is Myers v. United States (1926), which held that the President has the exclusive power to remove executive branch officials, such as postmasters, without the need for Senate approval. In this case, the Supreme Court struck down a law that required the President to obtain Senate consent to remove a postmaster. The Court held that the power to remove appointed officers is a key component of the President's ability to ensure that the laws are faithfully executed. The decision emphasized that the removal power is an inherent aspect of executive authority, necessary to maintain the President's control over the executive branch.
In 1926, however, there were very few of the so-called independent agencies that we know today. The SEC, FTC, and so on were created in the New Deal and after.
In Humphrey's Executor v. United States (1935), the Supreme Court held that the President could not remove a member of the Federal Trade Commission (FTC) for reasons other than those allowed by statute, which typically include inefficiency, neglect of duty, or malfeasance. This decision emphasized that independent agencies, like the FTC, perform quasi-legislative and quasi-judicial functions, and thus should be shielded from direct presidential control.
These cases established a fundamental distinction between executive branch officials (such as members of the Cabinet) and members of the independent agencies.
But there’s a wrinkle. The statute that created the FTC included a provision that the President could only remove FTC commissioners for “inefficiency, neglect of duty, or malfeasance in office,” none of which Humphrey had committed. The statute creating the SEC has no comparable provision. In addition, in 1934, when the statute creating the SEC had been adopted, Humphrey’s Executor had not yet been decided. As far as anyone knew, Myers was still the controlling precedent. Hence, there is an argument to be made Congress left out a removal provision out of the Securities and Exchange Act because it assumed that empowering the President to remove a Commissioner was unconstitutional.
The trouble is that Wiener v. United States (1958) held that that the President does not have the authority to remove a member of the War Claims Commission, an independent commission comparable to the SEC, without cause, even though the statute creating the commission was silent on the issue of removal.
Accordingly, the Supreme Court ruled that President Eisenhower could not remove a member of the War Claims Commission simply because he wanted to appoint someone else. The Court reasoned that the WCC was an independent body intended to operate free from executive influence, and that the nature of its functions—quasi-judicial in this case—required insulation from political pressures. The decision thus established a presumption that the removal of officials from independent agencies is restricted to ensure their independence and neutrality.
But then there is a further complication. In Wiener, the Supreme Court relied heavily on legislative history that tended to show Congress had intended to insulate the WCC from external review by both the executive and the judicial branch. There is no such legislative history pertinent to the SEC.
On top of all of which, we must consider that we are dealing with cases decided decades ago. The modern Supreme Court’s approach to statutory interpretation, deference to Presidential powers, and other relevant issues is much different than was that of the Court in the 1930s and the 1950s.
So I am “really sure” that the bottom line answer to the question of whether the President can remove an SEC Commissioner is a resounding “maybe.”
Of course, given current polls, it’s probably just a theoretical inquiry.
