SEC Chief Confirmed in Boost for Trump's Wall Street Agenda

  • Jay Clayton clears Senate over Democrats’ objections
  • President has called for rolling back financial rules

The U.S. Senate confirmed lawyer Jay Clayton to run the Securities and Exchange commission, President Donald Trump’s first major Wall Street regulator to take office as the administration pushes to roll back financial regulations.

Clayton, a partner at Sullivan & Cromwell whose clients included Goldman Sachs Group Inc., won approval Tuesday in a 61 to 37 vote.

Clayton, 50, will take office as Trump has repeatedly called for gutting the 2010 Dodd-Frank financial overhaul. Clayton said in his confirmation hearing that he wants to determine whether rules linked to Dodd-Frank are achieving their objectives.

“Jay Clayton will lead the SEC at a pivotal time,” said Annette Nazareth, a former SEC commissioner who is now a partner at Davis Polk & Wardwell in Washington. “A key focus will be on re-balancing regulation in a post-Dodd-Frank era.”

With Congress bogged down on other contentious issues and little consensus about rewriting Dodd-Frank, the Trump administration will need to rely on the SEC and other Wall Street regulators to undo existing rules.

While Trump has signed several executive orders aimed at easing financial rules, policy changes haven’t advanced due to vacancies at the SEC and other agencies, and because of appointees of former President Barack Obama, who remain on the job.

Read more: Empty Seats at Regulators Hold Back Trump Bid to Undo Dodd-Frank

At the SEC, rule-writing has largely been on hold since Mary Jo White stepped down as chair in January. Traders, banks and their lobbyists will closely watch early moves by Clayton, the first high-level Trump pick to take over a financial regulator, as a bell-weather during the Trump presidency.

Clayton, a political independent, has been tight-lipped about the specifics of his agenda. He has said he wants to make it more appealing for companies to sell shares to the public.

During his March Senate confirmation hearing, Clayton said Dodd-Frank era rules should be reviewed to see if they’ve been effective and that an SEC analysis of market structure should continue. He also pledged to be tough on corporate misdeeds amid criticism from Democrats that his career representing banks and hedge funds could lead to conflicts of interest.

Big Changes

Investors appear to be losing faith that Trump will succeed in rolling back financial regulations. The KBW Bank Index of 24 companies is down for the year after surging 30 percent in the fourth quarter of 2016.

If Clayton does want to make big changes quickly, he’ll need to win the backing of the SEC’s lone Democratic commissioner, Kara Stein. The five-person commission is down to just three members, allowing Stein to block Republicans’ efforts under the agency’s quorum rules by not showing up at a vote. While her term expires in June, she can stay on for about 18 months more if she’s not replaced by then. Trump hasn’t indicated who he’ll pick to fill the open slots or to replace Stein.

In a statement Tuesday, Clayton said: “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 is preparing to appoint senior officials to lead key SEC units, including those that investigate wrongdoing, oversee corporate filings and market structure, according to people familiar with the matter.

Those under consideration include Jamie Selway, head of execution services at Investment Technology Group, to lead trading and markets and William Hinman, a partner at Simpson Thacher & Bartlett, to run the corporation finance unit, according to the people. Steven Peikin, a partner at Sullivan & Cromwell, also has been under consideration to head the enforcement division.

— With assistance by Annie Massa, and Matt Robinson

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