The Securities and Exchange Commission is now a lot closer to having a new chairman.
President Donald J. Trump’s nomination to head the agency, Jay Clayton, was advanced from the Senate Banking Committee on April 4. The vote was 15-8, with all Republicans and three Democrats in the affirmative.
Clayton, a partner at law firm Sullivan & Cromwell, now heads to a final confirmation vote before the full Senate.
U.S. Sen. Sherrod Brown (D-Ohio), ranking member of the Senate Banking Committee, was among those voting against Clayton.
“Mr. Clayton is an experienced corporate lawyer, but his deep ties to Wall Street will leave him hopelessly conflicted in the SEC’s most high profile enforcement actions,” he said. “In an administration already rife with conflicts, Mr. Clayton in particular will face conflicts in cases involving the biggest banks on Wall Street, if not the world, that he used to represent. Those conflicts mean he will be on the sidelines, unable to vote on some of the SEC’s most important cases.” Recusals, he claimed, “will pile up.”
Brown added to his concerns. “In his confirmation hearing, Mr. Clayton told us he knows about the SEC’s investor protection mandate, but he failed to describe, even in the most basic ways, what the SEC can do make sure investors get a fair shake,” he said. “Instead, he said he believes it is acceptable to have a market where companies can impose governance structures that upend shareholder rights as long as they are disclosed. That is a disappointing answer from the person nominated to head the agency responsible for investor protection.”
“It’s not the first time we’ve seen a nominee like Mr. Clayton,” Brown added. “I was concerned about [former SEC Char] Mary Jo White’s conflicts and corporate law background. She was conflicted in dozens of high-profile cases, and then a month after stepping down as Chair, she returned to her old law firm. As a lawyer might say—that’s bad precedent. What American investors and markets need is a responsible, fully engaged SEC Chair who will understand what is important to Main Street investors and companies, and not just focus on what Wall Street needs and wants.”