Senate Dems to Focus on SEC Pick Clayton’s Clients

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By Rob Tricchinelli

Senate Democrats are planning to dive deep into Securities and Exchange Commission chairman nominee Jay Clayton’s lengthy client list when he testifies before the Senate Banking Committee March 23.

Sen. Catherine Cortez Masto (D-Nev.) gave a preview of Democrats’ line of thinking with a letter to Clayton, made public March 8, asking for more information about his representation of Swedish telecom giant TeliaSonera AB, and its ties to Russia, as part of his work as a partner at Sullivan & Cromwell LLP.

Clayton “will be required to recuse himself from an incredibly wide range of matters at the SEC, if confirmed,” Cortez Masto told Bloomberg BNA. “As noted in my letter, this will stymie the Commission’s ability to expeditiously resolve and effectively enforce our laws.”

Andrew Gray, a spokesman for Clayton, declined to comment.

Disclosure Forms

The letter was penned before the release of Clayton’s financial disclosure, separate from the ethics form, which indicated that he represented firms like Barclays Bank PLC, Deutsche Bank AG, Goldman Sachs Group Inc. and Royal Bank of Canada.

“These disclosures reinforce my serious concerns about Mr. Clayton’s ability to meet the core responsibilities and requirements necessary of SEC chair,” Cortez Masto told Bloomberg BNA.

Other Clayton clients include hedge funds Pershing Square LP and Tudor Investment Corp., private bank Brown Brothers Harriman & Co. and investment bank advisory firm Evercore Partners.

“It concerns me in that the Trump administration looks like an executive retreat for Goldman Sachs,” Sen. Sherrod Brown (D-Ohio), lead Democrat on the Senate Banking Committee, told Bloomberg BNA in an interview. “This SEC commissioner doesn’t look much different.”

Senate Banking Democrats will take a variety of approaches to their lines of questioning in Clayton’s hearing, Brown said.

Senate Banking

Despite the disclosures, not much is known about Clayton’s stances on many of the issues the SEC faces.

“What does he know about enforcement and about investor protections?” Brown said. “He’s not shown a lot yet on that in his career.”

Clayton has opined that regulations on small business are preventing them from going public and stressed the importance of cybersecurity protections at financial firms. He has also said that aspects of the Foreign Corrupt Practices Act put U.S. firms at a disadvantage on the international stage.

“He hasn’t had particularly deep conversations with any of us yet,” Brown said, noting that Clayton has met with several senators.

Clayton’s wife, Gretchen Butler Clayton, works for Goldman Sachs. In the ethics filing, Clayton said she would resign from the firm and divest her related holdings upon his confirmation.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

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

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