SEC's Clayton to step down at year's end

SEC's Clayton to step down at year's end
Democrat Joe Biden is expected to name his chairman pick in the coming weeks
NOV 16, 2020
By  Bloomberg

Jay Clayton, who has led the U.S. Securities and Exchange Commission for most of President Donald Trump’s term in office, said in a statement Monday that he will step down at the end of the year.

Clayton, a 54-year-old former deals lawyer who left New York-based Sullivan & Cromwell to join Wall Street’s main regulator, avoided the scandals that embroiled other Trump appointees and the political turmoil that engulfed previous SEC chairmen.

A political neophyte not registered with either political party, Clayton mostly succeeded in casting himself as being focused on protecting small-time investors from fraud and financial industry abuses rather than waging ideological fights.

Clayton’s claim to political independence was called into question when the White House said in June that it would tap him to replace a federal prosecutor who was investigating Trump’s associates. In the end, the bid to nominate him was blocked by Democrats, who said Clayton’s lack of criminal law experience made him unqualified for the job.

Democrat Joe Biden is expected to name his SEC chairman pick in the coming weeks.

Names the president-elect’s advisers are discussing as possible candidates include Gary Gensler, a Commodity Futures Trading Commission chairman during the Obama administration; Preet Bharara, Manhattan’s ex-top federal prosecutor; Kara Stein, a former Democratic SEC commissioner; Allison Lee, a current Democratic SEC commissioner; ex-SEC Commissioner Robert Jackson Jr., a political independent; and Chris Brummer, a Georgetown University law professor, according to people familiar with the matter.

With the support of the SEC’s Republican commissioners, Clayton was able to enact policy changes such as new broker conduct rules and a crackdown on firms that advise major shareholders on how to vote in corporate elections. He also pushed through a series of de-regulatory measures that make it easier to raise money in private markets.

At other times, Clayton bucked Republicans and sided with the agency’s Democrats to approve fines and other enforcement actions against firms accused of breaking securities laws. He also refused to significantly pare back the scope of the agency’s enforcement work as some conservatives and business groups wanted.

It’s standard practice for an SEC chairman to step down shortly after a presidential election, especially if there is a change of the party in power. Once the head of the agency leaves, one of the commissioners is installed as the acting leader until a permanent replacement is appointed by the president and confirmed by the Senate.

Clayton’s exit will be cheered by cryptocurrency enthusiasts who consider him a frustrating impediment. As the crypto bubble of 2017 and 2018 threatened to overshadow his agenda, Clayton led the SEC in taking a hard-line on digital assets. The agency said that they were covered by securities laws and sued to halt initial coin offerings and refused to approve Bitcoin exchange-traded fund.

Intercontinental Exchange Inc.’s New York Stock Exchange and Nasdaq Inc. may also be happy to see him leave. Clayton often clashed with the companies over how they charge for market data, which has become the lifeblood of modern trading. Through rule changes and in court, the SEC sought to limit the exchanges’ abilities to raise fees.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.