SEC Chair Nominee Says He Could Moderate Size of Financial Penalties; Make IPO Process Less Costly

In his confirmation hearing before the U.S. Senate Banking Committee, the nominee for SEC Chairman answered lawmakers’ questions regarding potential conflicts of interests and policy priorities.  Jay Clayton, who has represented clients including Goldman Sachs and Barclays as a lawyer for Wall Street law firm Sullivan & Cromwell, testified that his past role will not hamper his ability to effectively lead the SEC. The Wall Street Journal reported that in an ethics agreement with the SEC, Clayton agreed to recuse himself for a year from matters that directly affect his former clients or involve his former law firm. But Senator Elizabeth Warren expressed concern that such recusal could result in a deadlock on major enforcement actions. Clayton also testified regarding his potential policy priorities. He remarked that regulators could help spur economic growth by making it less costly for firms to go public and expressed his opposition to “regulations that are unnecessarily complex.” With respect to policing the financial markets, he commented on regulator-imposed financial penalties, saying: “shareholders do bear those costs,” and that it may be more effective for regulators to target individual wrongdoers instead of companies.  The House Financial Services Committee issued a statement in support of Clayton’s nomination, saying: “We are confident that Jay Clayton will lead the SEC in a better direction and clear away regulatory roadblocks that hinder small businesses and entrepreneurs from accessing the capital they need.” Senator Elizabeth Warren earlier wrote in an op-ed for the Washington Post that the next SEC chairman should be “willing to push back on powerful corporations and focus instead on looking out for hard-working Americans.”