SEC Chair Clayton to exit, giving Biden early chance to name key regulator

Politico | Kellie Mejdrich | Nov 16, 2020

Jay clayton stepping down from SEC chair - SEC Chair Clayton to exit, giving Biden early chance to name key regulatorUnder the SEC’s rules, it is up to the president to appoint an interim chair when the commission chair leaves

SEC Chair Jay Clayton plans to leave the commission at the end of the year, departing from the market regulator about six months before his term is up, the agency announced Monday morning.

Clayton's departure will be among the first of what will be a wave of exits from the Trump administration as Joe Biden is sworn in as the new president. Under the SEC’s rules, it is up to the president to appoint an interim leader when the commission chair leaves.

“Working alongside the incredibly talented and driven women and men of the SEC has been the highlight of my career,” Clayton, an independent who was sworn in on May 4, 2017, for a five-year term, said in a statement.

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The announcement did not say where Clayton is headed next. But his departure was expected after he told the House Financial Services Committee this summer that he wanted to return to New York. That was shortly after President Donald Trump announced his intention to nominate him to be U.S. Attorney for the Southern District of New York.

That appointment never happened, as Geoffrey Berman, then-U.S. attorney for the Southern District, refused to step down. The political flap was resolved when Berman was replaced by his deputy.

Clayton came to the SEC after more than two decades working at the Wall Street powerhouse firm Sullivan & Cromwell, representing banks such as Goldman Sachs. During his tenure at the regulator, he was criticized by Democrats for taking a light touch on enforcement and for expanding U.S. capital markets to include broader allowances for private offerings and proposing to dramatically cut down disclosures for many hedge funds.

Clayton also drew fire from Democrats for his approach to implementing a call in the landmark Dodd-Frank law to heighten an investment advice standard to avoid conflicts of interest among broker-dealers. Detractors said it did not apply the highest fiduciary standard of care that is followed by registered investment advisers.

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Despite the criticism of his time at the market regulator, the total of 3,152 enforcement cases brought under Clayton's chairmanship was actually higher than that of former SEC Chair Mary Jo White — a onetime federal prosecutor and appointee of President Barack Obama — during her tenure from 2013 to 2017.

Clayton also guided the SEC as it stepped into major legal fights during an unprecedented era of celebrity venture capitalist activity. The agency sued Elon Musk over tweets about taking his electric car maker Tesla private, and went after Elizabeth Holmes's blood testing company, Theranos. Both cases resulted in tough consequences for the executives, though some critics said the penalties involved were not harsh enough.

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