Clayton Says Client List Won’t Blunt Effectiveness at SEC

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By Rob Tricchinelli and Andrew Ramonas

SEC Chairman nominee Jay Clayton told the Senate Banking Committee March 23 that his lengthy client list as a corporate lawyer wouldn’t diminish his ability to run the agency and go after wrongdoers.

“I am committed to showing no favoritism to anyone in this position,” Clayton said during his nomination hearing. He took criticism from several Democrats, most notably Sen. Elizabeth Warren (D-Mass.), over the need to recuse himself from any enforcement case involving his former clients or firm, Sullivan & Cromwell LLP.

Clayton’s clients have included Goldman Sachs Group Inc., Barclays PLC, UBS Group AG and Deutsche Bank AG. “If I am recused, my fellow commissioners will be able to handle the matters ably and with good effect,” he said.

Goldman MBS

In response to a question from Sen. Chris Van Hollen (D-Md.), Clayton said he didn’t assist Goldman or any other client with mortgage-backed securities deals in the run-up to the 2008 financial crisis.

During the crisis, Clayton helped Goldman with the $10 billion it received in the federal government’s $700 billion bailout. His work, however, didn’t include advice on the bank’s handling of mortgage-backed securities that led to a $5.1 billion settlement with the Justice Department in 2016, he said.

“After the financial crisis, I did become familiar with mortgage-backed securities and how they worked,” Clayton said. “I spent a lot of time trying to understand how they worked.”

Van Hollen told Bloomberg BNA he is “troubled” that Clayton didn’t go further in criticizing Goldman’s pre-crisis conduct. He and several other committee Democrats, including Sens. Catherine Cortez Masto (Nev.), Brian Schatz (Hawaii) and Mark Warner (Va.), said they haven’t decided how they will vote on his nomination until they review his record.

Revolving Door

Clayton said he wouldn’t rule out returning to Sullivan & Cromwell after his term at the SEC. Former Chairman Mary Jo White rejoined Debevoise & Plimpton LLP after leaving the agency in January.

“I don’t think it’s an appropriate precedent to set,” Clayton said in declining to preclude a return to his firm. “That said, I am committed to this job.”

To contact the reporters on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com; Andrew Ramonas in Washington at aramonas@bna.com

To contact the editors responsible for this story: Phyllis Diamond at pdiamond@bna.com; Seth Stern at sstern@bna.com

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