House Democrats ask Uyeda to shield SEC from Musk's interference

Two House Democrats urged SEC acting Chair Mark Uyeda to protect the agency against interference from Elon Musk and his "Department of Government Efficiency" team, laying out concerns about what such interference could mean for the markets.

“DOGE’s actions could have serious ramifications for the well-functioning of the SEC and its ability to effectively carry out its mission of protecting investors and ensuring fair and orderly markets,” wrote Rep. Maxine Waters, D-Calif., the ranking member on the House Financial Services Committee, and Rep. Brad Sherman, D-Calif., the ranking member on the House Capital Markets Subcommittee, in a Feb. 13 letter to Uyeda.

Among other things, the lawmakers warned that “should Musk and his team gain access to the SEC’s systems, this will jeopardize the important role the SEC plays in maintaining and overseeing critical financial data.”

In an email, an SEC spokesperson said Uyeda “will respond to members of Congress directly” on the matter.

Musk and his team have faced widespread pushback recently regarding their reported access to the Treasury Department’s payment systems, which sparked a lawsuit to halt such access and another lawsuit to keep the team from accessing Labor Department data, though a federal judge denied the request related to DOL data, ruling the plaintiffs did not have standing for their lawsuit.

On Feb. 11, a judge ruled that Treasury Secretary Scott Bessent can access Treasury’s payment systems, while Musk and his DOGE team cannot, responding to a separate lawsuit on the issue, according to Bloomberg. A hearing on that lawsuit is scheduled for Feb. 14.

In their letter, Waters and Sherman warn that if unauthorized individuals gained access to the SEC’s consolidated audit trail, “they could manipulate or exploit market-sensitive information for personal or financial gain, leading to a loss of investor confidence, market instability, and potentially significant economic repercussions — including the collapse of our financial markets and individual retirees’ nest eggs.”

The consolidated audit trail, often referred to as the CAT, is a database for all equity and options trades on U.S. exchanges. On Feb. 10, the SEC issued an exemption from the requirement that personally identifiable information — such as names, addresses and birth years — be submitted to the CAT due to the dangers posed by a potential data breach.

Separately, the lawmakers urged Uyeda to safeguard certain SEC functions that “may be irreparably impacted by DOGE.”

Those responsibilities include “reviewing and approving registration statements” from companies raising money for the first time and those raising additional funding; conducting enforcement actions and levying fines against law violators; proposing and finalizing new rulemaking to protect investors; reviewing and approving registration applications; and reviewing periodic reports and filings that issuers submit to the SEC, among other things.

Waters and Sherman contend in their letter that “Congress — not the executive branch — has the power of the purse, and therefore neither the president nor any individuals or entities acting at their direction can alter appropriated funds without explicit congressional approval.”

They also write that Congress, and not the executive branch, “has the sole ability to authorize and dismantle federal agencies,” referencing reports that Musk's team is making moves to shutter the U.S. Agency for International Development and Consumer Financial Protection Bureau.

Finally, the lawmakers contend that Musk’s potential influence over the SEC’s operations presents conflicts of interest, given that the agency has filed enforcement actions against Musk.

“Mr. Musk’s involvement in any decisions regarding the future of the agency is highly inappropriate and raises significant questions about the agency’s continued independence and ability to enforce the law impartially,” Waters and Sherman wrote.

Answering reporters’ questions alongside the president in the Oval Office on Feb. 11, Musk said if there is a conflict of interest in his work with the government, he expects the public to speak out about it.

If there’s anything that “seems like maybe … there’s a conflict there, it’s not like people are going to be shy about saying that. They’ll say it immediately,” Musk said.

In their letter to Uyeda, the lawmakers request answers to nine questions about DOGE’s contact with the SEC thus far and how the acting chair plans to safeguard the agency from the group’s interference. The letter calls for responses to the questions by no later than Feb. 24.

“The integrity of our financial markets and the confidence of American investors depend upon the SEC’s ability to operate free from unauthorized interference and undue influence,” the lawmakers wrote.