By Matthew Radman,
Money and Investing Writer
Walter “Jay” Clayton has been selected by President Trump to lead the Securities and Exchange Commission. Clayton stated at his Senate hearing that he has no specific plans to disassemble regulations put in place by the Dodd-Frank Act, a move that Trump promised to be a large part of his plan for a less regulated economy.
This oversight by Clayton seems uncharacteristic for an administration that has taken steps towards rolling back the 2010 law created by the Obama Administration in the wake of the 2008 Financial Crisis.
Clayton said during his March 23 Senate confirmation hearing, “Dodd-Frank should be looked at, in particular, rules that have been in place as to whether they are achieving their objectives effectively… However, I have no specific plans to.”
As a partner at the prominent New York City-based business and commercial law firm Sullivan & Cromwell, Clayton has worked with such large Wall Street partners like Goldman Sachs (NYSE: GS), Deutsche Bank (NYSE: DB), Barclays (NYSE: BCS), and UBS (NYSE: UBS). Clayton is expected to be pivotal in the rollback of aspects of Dodd-Frank as Congressional Republicans make progress towards the Administration’s goal.
Clayton’s career as a prominent Wall Street lawyer, which has allowed him to forge strong relationships with large banks, has drawn criticism from Democrats. The same criticism was drawn during the Senate hearing of Treasury Secretary Steve Mnuchin, a former Goldman Sachs partner.
Massachusetts Senator Elizabeth Warren challenged Clayton on his various relationships during his Senate hearing. Warren, a staunch critic of the state of the financial industry, put into question Clayton’s ability to do his job properly with so many potential conflicts of interest. If any of his previous or current clients fell under SEC scrutiny, Clayton would have to recuse himself from taking a stance on those cases.
This rule could potentially create a problem as the SEC head acts as a tiebreaker between two Democratic and two Republican commissioners. Lacking one of these votes could result in potential deadlock and ultimately no enforcement on those cases.
Clayton has stated that he would not play favorites if chosen for the position. One of his primary objectives is to make public capital markets more attractive by making it more appealing for companies to sell shares publicly instead of relying so heavily on private investing. Clayton explains that “As a result, investment opportunities for Main Street investors are more limited. Here, I see meaningful room for improvement.”
President Trump’s goal for the nomination is to boost economic growth and create jobs by encouraging investment in US companies. Trump is confident in his pick stating, “Jay Clayton is a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules at the same time.”
Legal experts mention how Clayton’s background reflects past SEC chiefs. They expect less regulation and a possible straying away from former SEC head Mary Jo White’s policy of knit picking and placing fines on small violations to set a disciplined tone for larger cases.
Clayton is an experienced business lawyer with years of Wall Street experience. He promises to not play favorites despite his past connections but is still expected to favor deregulations, even if his intentions for Dodd-Frank are not yet set.
A version of this article appeared in the Tuesday, April 4th, 2017 print edition.
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