Chairman of the Securities and Exchange Commission: Who Is Jay Clayton?
If the giant Wall Street brokerage firm Goldman Sachs had been allowed to appoint the head of the Securities and Exchange Commission (SEC), the federal agency that is supposed to keep an eye on the financial industry, it might’ve chosen Jay Clayton. Clayton is an attorney who has handled many deals for Goldman Sachs and is even married to one of the brokerage’s wealth managers.
Goldman Sachs didn’t have to worry, because that’s exactly who Donald Trump, who declared during his campaign: “I’m not going to let Wall Street get away with murder. Wall Street has caused tremendous problems for us. We’re going to tax Wall Street,” nominated on January 4, 2017.
Like Trump, Walter J. “Jay” Clayton is a graduate of the University of Pennsylvania. Clayton earned a B.S. in engineering in 1988 and a J.D. in 1993 from Penn, sandwiched around a B.A. in economics from Cambridge University in 1990. After law school, Clayton clerked for federal district Judge Marvin Katz of the Eastern District of Pennsylvania until 1995.
Clayton went to work for the law firm Sullivan & Cromwell as a partner, spending time earlier in his career in the firm’s London office. Specializing in mergers and acquisitions, he has worked on cases involving Goldman Sachs at least since 2002, according to Fortune.
Clayton advised Goldman Sachs in 2008 when Warren Buffett invested $5 billion in the then-struggling firm. He also worked for Goldman as it applied to sell $5 billion worth of stock to pay down the $10 billion loan it got from the Treasury to stay afloat during the financial crisis that occurred at the end of the George W. Bush presidency.
Goldman hasn’t been Clayton’s only client, however. He represented Barclays as it acquired the ruins of Lehman Brothers during the crash and Bear Stearns as its assets were sold off to J.P. Morgan Chase.
“It’s hard to see how an attorney who spent his career helping Wall Street beat the rap will keep President-elect Trump’s promise to stop big banks and hedge funds from ‘getting away with murder,’” Sen. Sherrod Brown (D-Ohio), said upon Clayton’s nomination. “I look forward to hearing how Mr. Clayton will protect retirees and savers from being exploited, demand real accountability from financial institutions the SEC oversees and work to prevent another financial crisis.”
Some of the companies involved in Clayton’s deals are already being investigated by the SEC. He represented Goldman and others in the $25 billion initial public offering of Alibaba, the giant Chinese internet retailer. Alibaba’s accounting practices are now being looked at by the SEC.
Clayton will be forced to recuse himself for SEC investigations into Goldman Sachs, which because of the firm’s size, will likely be often. However, he won’t necessarily have to be sidelined for making (or suspending) regulations that could benefit Goldman, even though his wife, Gretchen, has worked for Goldman since 2000 and is currently a vice-president. The loophole is that if a rule affects all such firms equally, Clayton won’t have to recuse himself, according to Matt Taibbi at Rolling Stone. So Trump, who hounded Sen. Ted Cruz (R-Texas) mercilessly during the primaries because his wife worked for Goldman, has nominated an SEC chief guilty of the same sin.
Clayton is concerned with cybersecurity, co-writing a 2015 opinion article about what he saw as threats and possible solutions.
Jay and Gretchen Clayton have three children.
To Learn More:
Official Biography (Sullivan & Cromwell)
Trump to Tap Wall Street Lawyer Jay Clayton to Head SEC (by Renae Merle, Washington Post)
Trump Nominee Jay Clayton Will Be the Most Conflicted SEC Chair Ever (by Matt Taibbi, Rolling Stone)
Here’s How Closely Donald Trump’s Pick for SEC Chair Is Tied to Goldman Sachs (by Lucinda Shen, Fortune)
Donald Trump Nominates Wall Street Lawyer to Head SEC (by Leslie Picker, New York Times)
We Don’t Need a Crisis to Act Unitedly Against Cyber Threats (by Jay Clayton, David Lawrence and Frances Townsend)
The Foreign Corrupt Practices Act and its Impact on International Business Transactions (by New York City Bar Committee on International Business Transactions—Chaired by Jay Clayton)
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