Prominent Wall Street lawyer Jay Clayton gets Senate approval to become the next SEC chairman.
Despite opposition from some key Democrats, the U.S. Senate voted on Tuesday to confirm Walter J. “Jay” Clayton III, a former partner with the law firm Sullivan & Cromwell, as the next chairman of the SEC, succeeding Mary Jo White.
White served as chair from April 2013 to January 20, 2017 when Donald Trump became president. When sworn in, Clayton will join Kara M. Stein and acting chairman Michael S. Piwowar. Two more commissioners will have to be found to fill out the SEC’s board.
Clayton was approved 61-37 with two senators abstaining. The Trump pick did not get the support of the U.S Senators from New York and New Jersey in part because of his connections to global firms such as Barclays, Deutsche Bank and Goldman Sachs.
At Sullivan & Cromwell, Clayton’s practice focused on “public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters where multidisciplinary advice and experience is valued,” according to the law firm’s website. He has also been involved in major initial public offerings (IPOs) such as the widely publicized Alibaba offering. He also advised firms that had dealings with the SEC, the Justice Department and the Federal Reserve.
Among his critics are U.S. Sen. Elizabeth Warren (D-Mass.) and U.S. Sen. Sherrod Brown (D-Ohio) who challenged Clayton’s potential conflicts of interest. Brown argued for a different nominee because of the “need for a strong, independent watchdog to police Wall Street.”
Given his past affiliations, Clayton will have to recuse himself from SEC cases against Goldman Sachs.
However, in his prepared statement at the start of the approval process, Clayton anticipated the concerns of the Senators and said that he is “100 percent committed to rooting out any fraud and shady practices in our financial system. I recognize that bad actors undermine the hard-earned confidence that is essential to the efficient operation of our capital markets. I pledge to you and the American people that I will show no favoritism to anyone.”
Among Wall Street associations such as the Securities Industry and Financial Markets Association (SIFMA) there is initial optimism that Clayton represents a return to growth in the financial markets.
“We congratulate Jay Clayton on his confirmation as SEC Chairman and look forward to working with him on issues of importance to investors that enhance our capital markets, help stimulate economic growth and create jobs,” says Kenneth E. Bentsen, Jr., SIFMA president and CEO in a prepared statement.
The self-regulatory organization, the Financial Industry Regulatory Authority (FINRA) offered congratulations for the confirmation. “Jay’s broad experience and his keen understanding of capital markets and securities regulation will serve investors and market participants well as the SEC works to ensure that safe, strong securities markets remain a cornerstone of the U.S. economy. I look forward to working with him in his new role,” says Robert W. Cook, president and CEO of FINRA.
Clayton is expected to be sworn in this week or next.
The SEC’s commissioners are appointed by the president and confirmed by the Senate. Each commissioner’s terms is five years long and the terms are staggered so that one commissioner’s term ends on June 5 of each year, officials say. The commission maintains a bi-partisan membership policy and “no more than three commissioners may belong to the same political party.”
(Editor’s Note: Clayton was sworn in on May 4 by U.S. Supreme Court Justice Anthony M. Kennedy as the 32nd Chairman of the SEC. “It is a tremendous honor to lead the SEC and to be sworn in by Justice Kennedy, whom I greatly admire,” Clayton said in a statement. “The work of the SEC is fundamental to growing the economy, creating jobs, and providing investors and entrepreneurs with a share of the American Dream.”)
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