Trump’s SEC Pick Brings Conflicts of Interest

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By Andrew Ramonas

Shira Pavis Minton probably isn’t a household name to New York lawyer Jay Clayton. As Securities and Exchange Commission chairman, however, the Sullivan & Cromwell LLP partner could become very familiar with the woman charged with ensuring an ethical agency.

Clayton’s career as a New York corporate lawyer will give the SEC’s ethics counsel a host of potential dilemmas to consider if the Senate confirms him as Wall Street’s top cop. He will have to tread carefully to avoid ethics problems that could arise from his role at Sullivan and navigate conflicts of interest stemming from his marriage to Goldman Sachs Group Inc. wealth manager Gretchen Butler Clayton.

Federal ethics rules generally bar SEC commissioners and other executive branch employees from making decisions on issues that specifically involve their former clients or employers for a year. Anything directly concerning their spouse’s employers is off limits indefinitely.

“You can’t firewall the conflicts of interests that Clayton would bring to this position,” said Jeff Hauser, executive director of the Center for Economic and Policy Research’s Revolving Door Project, which promotes government transparency and accountability.

Andrew Gray, a Trump transition team spokesman for Clayton, declined to comment. But Trump said in a statement announcing his intention to nominate Clayton that the lawyer is “a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules.”

Clayton Clients

The president-elect’s choice for SEC chief provides legal services to Barclays Capital, Goldman Sachs—both regulated by the commission—and other large corporations, according to Sullivan’s website.

During the 2008 financial crisis, Clayton helped Barclays with its purchase of Lehman Brothers’ assets and assisted Goldman with the $10 billion it received in the federal government’s $700 billion bailout.

He also represented Italian oil company Eni SpA and its subsidiaries in connection with a bribery investigation by the SEC and Justice Department. Eni and its former Dutch subsidiary ultimately agreed to pay the SEC $125 million to resolve Foreign Corrupt Practices Act charges over their alleged roles in a scheme to bribe Nigerian officials.

Although potential conflicts may require Clayton to recuse himself from actions affecting specific corporations, they probably won’t stop him from taking action on various regulatory and enforcement policies in the GOP crosshairs. Dodd-Frank Act implementation and FCPA enforcement—which Clayton has argued is causing “lasting harm” to U.S. companies—generally would be fair game.

“You’re picked and the Senate confirms you, and on the big policy questions, it doesn’t become that disabling,” a former SEC official, who requested anonymity, told Bloomberg BNA in a phone interview.

Clayton wouldn’t be the first SEC chairman with potential conflicts of interest from a career as a lawyer in the private sector. SEC Chairman Mary Jo White, who is set to step down before Trump takes office Jan. 20, was a member of Debevoise & Plimpton LLP before she joined the commission in 2013. During White’s tenure at Debevoise, her clients included Deloitte & Touche LLP, Deutsche Telekom AG, convicted inside trader Rajat Gupta, JP Morgan Chase & Co., UBS AG, and General Electric Co., according to disclosures she made during the confirmation process.

White also has had to navigate conflicts of interest stemming from her marriage to former Corporation Finance director John White, a New York-based Cravath, Swaine & Moore LLP partner and an “unpaid member” of advisory groups that counsel the Financial Accounting Standards Board and the Public Company Accounting Oversight Board.

Citing ethics concerns, advocacy groups in 2015 urged the SEC chief to recuse herself from selecting someone to chair the Public Company Accounting Oversight Board, which oversees audits of public companies. Although White has said the ethics office approved her taking action, the SEC still hasn’t appointed anyone to the post. Former SEC general counsel James Doty continues to serve as PCAOB chairman, even though his term expired at the end of October.

White’s potential for conflicts of interest is a “disaster,” according to Hauser, who is using the Freedom of information Act to seek details on ethics guidance she has received. “We don’t even know a tally on how problematic [White’s] ethics were,” he told Bloomberg BNA.

Harvey Pitt, who was SEC chairman from 2001 to 2003, also faced scrutiny over his role as a senior corporate lawyer and co-chairman of Fried, Frank, Harris, Shriver & Jacobson LLP. Some members of Congress called on him to recuse himself from work on Enron Corp., which collapsed in 2001. Pitt in private practice represented accounting firm Arthur Andersen LLP, Enron’s outside auditor.

“If and when I am asked to do anything on this matter, I will follow both the letter and the spirit of the ethical requirements of this office,” Pitt said in a statement at the time. “Any suggestion that I would do otherwise is an attempt to politicize the workings of an independent agency.”

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editors responsible for this story: Phyllis Diamond at; Seth Stern at

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