SEC, Jay Clayton

The U.S. Senate has approved the nomination of Jay Clayton as chairman of the Securities and Exchange Commission, putting a lawyer who one Democrat called “one of Wall Street’s most loyal guardians” in charge of the regulator.

“I look forward to working closely with my fellow commissioners and the dedicated career staff at the SEC to serve the American public and advance the SEC’s important mission,” Clayton said after the Senate confirmed him on a 61-37 vote.

During the confirmation hearing, Clayton, a partner at the law firm of Sullivan & Cromwell, assured lawmakers that he could be tough on Wall Street despite his industry connections. He has spent decades representing large banks including Goldman Sachs and Barclays.

“I have zero tolerance for bad actors,” Clayton said.

But Sen. Bob Menendez (D-N.J.) said Clayton’s record with Goldman and as an adviser to Bear Sterns during its 2007 sale of JPMorgan Chase made him unfit for the SEC job. “This administration wants to give the keys to the castle to one of Wall Street’s most loyal guardians,” he lamented.

Sen. Elizabeth Warren (D-Mass.) described Clayton’s nomination as “just one more broken promise, one more time that Donald Trump has put Wall Street ahead of the interests of the American people.”

Clayton has identified himself as an independent but as Politico reports, “he is expected to align himself with Republicans and steer the SEC away from an enforcement agenda that the agency has pursued since the 2008 financial crisis.”

“Republicans are going to be less aggressive on the fines, given their public statements,” said Fraser Hunter, a partner at law firm WilmerHale, who worked with Clayton at Sullivan & Cromwell. “The Republicans will be more focused on capital formation and on rulemaking that frees up capital formation.”

Ethics rules will require Clayton to sit out enforcement votes during his first two years in office on matters involving former clients and he would also need to recuse himself from matters where Sullivan & Cromwell represents a party.

“Americans deserve a chair who will run the SEC on their behalf, not for the benefit of Wall Street banks and big corporations,” Sen. Sherrod Brown (D-Ohio) said.

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