Senate Committee Grills Trump SEC Nominee
Sullivan & Cromwell attorney Jay Clayton, President Donald Trump’s pick to lead the Securities and Exchange Commission, sat before the Senate Banking Committee yesterday for his confirmation hearing and was confronted by pointed questions regarding his close ties to Wall Street and possible need to frequently recuse himself from matters of concern to the SEC.
Clayton’s law firm has represented numerous financial clients including Goldman Sachs, Barclays, Deutsche Bank, UBS Securities, Royal Bank of Canada, Pershing Square and others.
In an agreement filed with the U.S. Office of Government Ethics earlier this month, Clayton said that he would recuse himself for one year from matters involving his law firm. In addition, he plans to recuse himself from matters involving former clients for a period of one year after he last provided them legal services.
“I am 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,” said Clayton in his opening statements.
Senator Elizabeth Warren (D-MA) and others expressed concern that Clayton’s multiple potential recusals would allow “bad actors” to go unpunished due to the deadlock that would likely ensue if one Democrat and one Republican were voting.
“I just want to point out that this is not a theoretical problem. Recusals were a very big issue for the outgoing SEC chair Mary Jo White,” said Senator Warren. “Like [Clayton], she came from a major Wall Street law firm, and according to the New York Times, in her short time heading up the SEC she had to recuse herself in at least 48 enforcement matters because of conflicts involving her former clients, her former law firm, and her husband’s clients and law firm.”
The SEC has five commissioners who are appointed by the president and no more than three may belong to the same political party. The Commission currently has two members, Democrat Kara Stein and Republican Michael Piwowar – who currently serves as its acting chair. If confirmed, Clayton will succeed Mary Jo White, who stepped down from her post in January at the end of the Obama administration.
When speaking with Senator Bob Corker (R-TN) on how he would handle the partisan politics that have plagued the SEC in recent years, Clayton alluded to his experience in reaching consensus as a transactional attorney could possibly give him an edge in securing unanimous votes.
“People have fundamental disagreements, but my job for 20 years has been to reach consensus,” said Clayton. “People don’t do transactions unless they agree to do transactions. I believe in consensus. I would very much like as chair to have unanimous votes on important matters.”
