As he prepares to testify before the Senate Banking Committee on March 23, President Donald J. Trump’s pick to serve as chairman of the Securities and Exchange Commission is facing questions about potential conflicts of interest he may face.

Jay Clayton, currently a partner with the law firm Sullivan & Cromwell, would replace former Chairman Mary Jo White. The upcoming Congressional hearing is a prelude to confirmation by the full Senate.

Clayton, according to the Trump Administration’s nomination announcement, “has had a long and distinguished career advising on public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters.”

In a financial disclosure recently filed with the Office of Government Ethics, Clayon revealed that he earned $7.6 million this year from his law firm. In the filing, he detailed how he would unwind his relationship with the law firm that currently employs him.

“If confirmed by the Senate, I will resign from the partnership of Sullivan & Cromwell,” Clayton wrote. “Pursuant to the firm's partnership agreement and before I assume the duties of the position of Chairman, I will receive a refund of my capital account and a pro rata partnership share based on the value of my partnership interests for services performed in 2016 and 2017. All payments will be based on and made from the firm's earnings through the date of my withdrawal from the partnership.”

Among those not completely satisfied with the filing and its completeness is Sen. Catherine Cortez Masto (D-Nev.). A member of the Senate Banking Committee she is demanding more information on Clayton’s financial dealings. 

On March 8, she sent a letter to Clayton to detail her concerns about his ability to “effectively serve” as SEC chairman, citing “numerous conflicts of interest and work on behalf of corporations with ties to Russia and Iran.”

“I am concerned that your long career representing companies regulated by the SEC will require you to recuse yourself from a wide variety of SEC enforcement matters, which may, in turn, limit the SEC’s ability to resolve cases in an expeditious manner,” she wrote.

Cortez Masto compared Clayton’s potential conflicts to those of former Sec Chair Mary Jo White. Her tenure, the Senator wrote, “demonstrates how routine recusals can stifle the Commission’s enforcement work.”

“Like you, Ms. White represented corporate clients at a large law firm before being nominated,” the letter says. “After Ms. White was confirmed to lead the SEC, the Commission routinely struggled to resolve enforcement matters because [she] had to recuse herself from participating in dozens of SEC enforcement decisions.”

Because of Chair White’s client list—and her husband’s continuing employment at a large law firm—Chair White had to recuse herself from nearly 50 enforcement investigations. “That often left the Commission deadlocked on decisions relating to enforcement actions, delaying settlements and opening the door… to a lighter punishment in at least one instance,” Cortez Masto wrote, fearing that Clayton’s nomination could lead to more of the same. “As a long-time partner at Sullivan & Cromwell you represented a virtual who’s who list of industry titans.”

Four of his revealed clients have been charged with violations of SEC rules in the last five years, she added.

Specific concerns detailed in the letter include Clayton’s involvement with TeliaSonera, “a Swedish telecom company with links to Russia and Iran that may be in the midst of negotiating a massive settlement with the U.S. government related to violations of the Foreign Corrupt Practices Act.”

The SEC has investigated Telia for an incident involving a bribe paid to the daughter of Uzbek dictator Islam Karimov in exchange for access to the Uzbek market. In September 2016, U.S. and Dutch authorities proposed a $1.4 billion settlement with Telia in this matter.

Cortez Masto itemized information she and other Democrats on the Senate Committee on Banking, Housing, and Urban Affairs would like answers to before the March 23 hearing with Clayton. On the list:

Describe the precise nature of your representation of TeliaSonera or Telia Company.

A list of every client you currently represent or have represented while a partner at Sullivan & Cromwell, and a brief description of the nature of your representation and outcome in each instance.

A list of every current client of Sullivan & Cromwell that is either regulated by the SEC or may be directly and substantially impacted by any decision made in your capacity as SEC Chairman, if confirmed (including as a voting member of the Financial Stability Oversight Council) consistent with President Trump’s Executive Order on ethics.

A list of your current or former clients that currently have open and publicly disclosed investigations with the SEC.

A list of every client of Sullivan & Cromwell that currently has open and publicly disclosed investigations with the SEC.

A list of every current or former client that has been charged with violating SEC rules in the last five years.

A list of every client of Sullivan & Cromwell that has been charged with violating SEC rules in the last five years.

Also requested: a list of any other potential recusals Clayton will face as SEC chairman, and the reasons for these recusals.

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