Sullivan and Cromwell Partner Jay Clayton, who will be President-elect Donald Trump’s nominee to head the Securities and Exchange Commission, is drawing praise for being an “accomplished securities lawyer,” but industry officials worry his expertise in representing firms like Goldman Sachs and Wall Street’s too-big-to-fail banks could leave American investors in the cold.
“Clayton is a highly regarded, respected and accomplished securities lawyer, with a deep understanding of the complexities of modern securities transactions and regulations,” said Karen Barr, president and CEO of the Investment Adviser Association in Washington, in a statement. If confirmed by the Senate, IAA “looks forward to working with him and his fellow Commissioners on all issues that directly affect the investment advisory profession.”
Dan Gallagher, a Republican SEC Commissioner from 2011 to 2015, also praised Clayton, saying, “Jay is a brilliant lawyer, he has an amazing work ethic, and he is a just plain good person. I am so happy for the Commission and the staff that Jay will be taking over as Chairman.”
Current SEC Chairwoman Mary Jo White will depart this month. The women nominated by President Obama to fill the two vacant SEC commissioner seats — Hester Peirce and Lisa Fairfax — were not confirmed by the full Senate during the now-ended 114th Congress’ lame-duck session. Former SEC Commissioner Luis Aguilar noted in early December that Trump will likely “come up with his own people” for those vacant positions.
Clayton’s bio touts his participation in an array of M&A and capital markets transactions involving financial institutions, telecoms, airlines and other international companies, including the initial public offering of Alibaba and the acquisition of Lehman Brothers by Barclays Capital. He also counseled Goldman Sachs in connection with the investment of $5 billion by Berkshire Hathaway and the U.S. Treasury’s Troubled Asset Relief Program and was also involved with the sale of Bear Stearns to JPMorgan Chase.
He advises various companies in connection with matters involving the Federal Reserve, SEC, Department of Justice and other authorities, and has also served as an adjunct professor at University of Pennsylvania Law School since 2009.
Dennis Kelleher, president and CEO of Better Markets, an advocacy group that supports financial regulation, noted in a statement that while Clayton “may be an excellent lawyer” representing Goldman Sachs and large banks, “America’s families need to know that he will represent them as zealously and as effectively. He must lead without fear or favor and he must not bring the failed mindset that ‘what’s good for Wall Street is good for America,’ which the 2008 financial crash proved catastrophically wrong.”
The SEC, Kelleher added, “is supposed to be the cop on the Wall Street beat. When it fails to do its job, the American people pay the price in lost homes, jobs, savings and so much more. We saw that when the SEC deregulated Wall Street before the 2008 financial crash and failed to enforce the law afterwards.”
Kelleher urged lawmakers to focus on such issues during the Senate confirmation process.
Todd Cipperman of Cipperman Compliance Services, and former general counsel for SEI Investments, added that appointing Clayton, who has represented many investment firms, is a “return to a more traditional path,” than White, who “came from a prosecutorial background.” White’s SEC “focused heavily on enforcement as she brought her ‘broken windows’ approach to securities markets.”
Cipperman, which provides services to investment management firms, “welcomes an SEC chair that has industry experience and understands the challenges faced in this competitive industry,” Cipperman said.
Clayton graduated from the University of Pennsylvania Law School with a JD in 1993 and from Cambridge University with BA/MA in economics in 1990. He also received a bachelor’s degree in engineering from the University of Pennsylvania in 1988.
— Related on ThinkAdvisor:
- With White’s Departure From SEC, Hopefully the Bullying Will End
- SEC Chief White to Step Down in January
- Ex-Prosecutor Emerges as Top Trump Pick for SEC Chief