By Martin Kimel

About the author: Martin Kimel is an attorney who recently retired from the Securities and Exchange Commission. He is the co-author of The Pessimist's Son: A Holocaust Memoir of Hope.

For nearly 31 years, I was what President Donald Trump would call a "corrupt, incompetent and unnecessary deep state bureaucrat." The Securities and Exchange Commission was my professional home under leadership appointed by both parties. Before my retirement this year, I watched with alarm as the agency was being damaged by people who haven't the vaguest clue what public service means.

My ex-colleagues still at the Commission can't speak out in their own defense. But I can. Cuts to the SEC, spearheaded by Elon Musk before he departed from the U.S. DOGE Service this week, won't save money. But they will put investors at greater risk and may slow the pace of financial innovation.

The SEC's lawyers, accountants, economists, and experts oversee the nation's $120 trillion securities markets. They deter fraud, ensure fair and efficient markets, and help businesses access capital. Virtually any of them could get higher-paying private-sector jobs. Instead they chose to devote themselves to the unglamorous work of serving the public.

The approximately 4,200 SEC employees (5,000, until recently) are decidedly not "low productivity," regardless of what Musk might think. They enforce federal securities laws, approve products, review corporate filings, examine broker-dealers and registered investment advisors, write and amend rules, provide guidance to the industry, and educate the public.

I worked through Trump's first term, but that still didn't prepare me for how bad things would get under his second.

The Trump administration, Musk, and DOGE didn't take long to come for us. DOGE stands for Department of Government Efficiency -- but it isn't a department and it certainly hasn't been making anyone at the SEC more efficient. Like other federal agencies, we were required to submit the lists of five things we did last week. There is no apparent use for these lists, making them the very definition of government waste.

Although telework at the SEC was a huge success, Trump ordered us back to the office five days a week -- a stricter policy than we had before Covid-19. Trump touted the policy as "a way to encourage people to quit." No business encourages its employees -- regardless of what they do and how well they do it -- to quit en masse. Yet, thanks to DOGE, this is what happened.

The administration then abruptly announced, without consulting SEC leadership, that it was canceling the leases of the SEC's Los Angeles and Philadelphia offices. If less-expensive office space wasn't found before the leases were terminated, the staff was informed, they would work every day from home. So much for return-to-office efficiency.

I experienced some dark times during my SEC career, including the 2008-09 financial crisis and the Enron and Madoff scandals. But morale at the Commission is the worst I have ever seen -- by far. No job is secure. Nobody knows what will become of the agency or its independence.

So when the SEC offered early retirement and an incentive payment for people to voluntarily resign, I and hundreds of others reluctantly accepted. Many co-workers told me that they wished they, too, qualified for retirement or could afford to retire. It was heartbreaking. In addition, many excellent mid-career professionals quickly found private-sector jobs and left. More employees will follow.

As talented as the remaining SEC employees are, I hear from some still at the agency that they are struggling to get the work done. That isn't surprising, given the sudden exodus of so many experienced folks. Moreover, weakening the examinations and enforcement divisions, and others, may result in more scams and fraud going undetected or un-prosecuted. Americans' investments toward a home, college, or retirement will be less protected.

The Commission will probably also make more mistakes. It is a highly collaborative organization, with all draft rules and enforcement recommendations reviewed by various offices and policy divisions, such as Investment Management, Trading and Markets, and Corporation Finance. Those reviews may now not always be of the same high quality (or speed).

Finally, the SEC staff works closely with industry to facilitate innovation, and this, too, may suffer. SEC staff frequently work with a financial product's sponsor to craft conditions in exemptive orders so that a product can be brought to market, albeit more safely for investors. For instance, exchange traded funds didn't exist before 1993 and required various exemptive orders from the SEC. Since their launch, ETFs have evolved and grown explosively, with total net assets of $10.3 trillion by 2025. With less-expert and fewer SEC staff, the pace of product innovation may slow.

And what will be gained? Shrinking the SEC's footprint and slashing its head count won't save taxpayers a dime. The agency's annual budget of about $2.1 billion doesn't contribute to the federal deficit, because the Commission effectively pays for itself through industry fees.

Government jobs used to entail a certain bargain: You made less money, but you got to wear a "white hat" and do interesting and important work -- with job security. By breaking this bargain, Musk and the Trump administration have, perhaps permanently, made government service less attractive to the most talented workers. That is an odd and unfortunate result for people who claim to be improving the federal government.

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May 31, 2025 04:00 ET (08:00 GMT)

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