Dodd-Frank ‘Should Be Looked at,’ SEC Nominee Clayton Says

Trump nominee tells Senate committee he has no 'specific plans' for a Dodd-Frank attack, and that mandated rules 'should go forward'

SEC chairman nominee Jay Clayton. (Photo: Diego Radzinschi/NLJ) SEC chairman nominee Jay Clayton. (Photo: Diego Radzinschi/NLJ)

Jay Clayton, President Donald Trump’s nominee to be the next chairman of the Securities and Exchange Commission, said Thursday that he doesn’t have “any specific plans for an attack” on the Dodd-Frank Wall Street Reform and Consumer Protection Act if confirmed, only a review, and that unfinished rules mandated by Dodd-Frank “should go forward.”

Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee, queried Clayton during his confirmation hearing before the Senate Banking Committee about Trump’s stated promise to “do a big number” on Dodd-Frank, and asked him “what aspects of Dodd-Frank are you going to attack?”

While Clayton responded that he had no specific plans for an assault on the law, “I do believe it should be looked at, [the] rules that are in place, on whether they are achieving their objectives.”

Clayton added: “The question of whether Dodd-Frank has been effective is on the minds of the administration.”

When queried by another senator on what he thought of recent comments made by acting SEC Chairman Michael Piwowar that he planned to “halt” mandated Dodd-Frank Act rulemakings, Clayton responded: “Rulemaking should go forward as required by statute.”

Clayton noted during the hearing that he sees “a problem with regulations that are unnecessarily complex,” noting that it’s “very costly to address them and it creates loopholes and an opportunity for ‘gotcha’” enforcement. He stressed the importance of “to the extent practical, reducing complexity” and providing “clarity” when it comes to rules.

The cost of regulations, broadly, Clayton said, is the main contributor to fewer companies choosing to go public.

In his opening comments to the committee, Sullivan & Cromwell partner Clayton said that, if confirmed, he’d “take up this responsibility [as chairman] with energy and purpose,” and pledged “to work with fellow commissioners, the SEC and this committee and others who work to defend our capital markets.”

He stressed his view that there’s “zero room for bad actors in our capital markets; I’m 100% committed to rooting out bad actors…. I promise to you that I will show no favoritism to anyone.”

Clayton said as chair of the securities regulator, he would be “very interested in working with state securities commissions and others,” adding that “it’s also my experience that bad actors have been bad for a long time.”

Said Clayton: “We should be looking with technology at better and more efficient ways to monitor those individual advisors and brokers.”

Sen. Jack Reed, D-R.I., asked Clayton how he’d handle an agency in need of budget resources, stating that in Trump’s “skinny budget,” domestic agencies “are being decimated.”

Clayton responded that “In terms of using resources, [the focus would be on] using them as effectively as possible. In the area of enforcement, … I do believe individual accountability has a bigger effect across the system then corporate” accountability.

He added that in order to prioritize, “I would have to get up to speed on the areas of acute need.”

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