SEC Chair Nominee Clayton's Ethics Report Reveals Range of Possible Conflicts -- 2nd Update
March 08 2017 - 6:05PM
Dow Jones News
By Dave Michaels
WASHINGTON -- President Donald Trump's nominee to lead the U.S.
Securities and Exchange Commission faces a range of possible
conflicts of interest due to the long list of banks and public
companies he has represented as one of Wall Street's top
lawyers.
Jay Clayton, a partner at Sullivan & Cromwell LLP whose
Senate confirmation hearing is scheduled for March 23, has done
legal work for Ally Financial Inc., Barclays PLC, Goldman Sachs
Group Inc., Deutsche Bank AG, Tudor Investment Corp. and its
co-chairman Paul Tudor Jones, and Pershing Square LP, according to
a federal ethics report made public Wednesday.
Under SEC ethics rules, Mr. Clayton likely wouldn't be able to
participate in agency business -- such as enforcement cases -- that
directly involves his former clients. Mr. Clayton has represented
Valeant Pharmaceuticals International Inc., a firm that is
currently under SEC and criminal investigations. He has counseled
two other corporate clients whose identities were withheld from his
ethics report because they face a "nonpublic investigation,"
according to the disclosure.
Mr. Clayton's connections to Wall Street aren't uncommon for an
incoming SEC chairman, but some Senate Democrats are still likely
to question his ties to banks such as Goldman Sachs, where his
wife, Gretchen Butler Clayton, works as a financial adviser. Ms.
Clayton plans to resign if her husband is confirmed by the Senate,
a person familiar with the matter has said.
A coalition of liberal groups, including Public Citizen and Our
Revolution, has already launched an effort to oppose Mr. Clayton's
confirmation. Our Revolution was founded by former staffers and
volunteers for Sen. Bernie Sanders's 2016 presidential
campaign.
A spokesman for Mr. Clayton declined to comment.
If Mr. Clayton's past work hampers his ability to vote on agency
business, that could open the door to partisan gridlock between the
agency's two other commissioners, one Republican and one
Democrat.
Under former Chairman Mary Jo White, several high-profile
enforcement cases took longer to settle because past clients of Ms.
White or those of her husband interfered with her ability to
participate.
The disclosure report, which all nominees for Senate-confirmed
jobs must file with the U.S. Office of Government Ethics, also
reveals the extent of the wealth Mr. Clayton has amassed over more
than two decades at Sullivan & Cromwell, a legal powerhouse
among the firms that cater to Wall Street.
Mr. Clayton and his wife hold assets valued between $12 million
and $47 million, excluding trusts that benefit only Ms. Clayton and
their children, according to the ethics report.
He earned more than $7.6 million in the past year and could
receive as much as $1 million more in partnership income if the
Senate confirms him and he cuts all ties with the law firm,
according to the report.
Through investment funds available to Sullivan & Cromwell
partners, Mr. Clayton has exposure to various private-equity funds,
including ones managed by Warburg Pincus LLC, Bain Capital, J.C.
Flowers & Co. and TPG Capital. He plans to redeem his holdings
in those funds, which are valued between $215,001 and $550,000,
within 90 days of his Senate confirmation, the report states.
Federal financial disclosure forms only require officeholders to
report the value of their assets as a range.
The form doesn't reveal Mr. Clayton's wife's income, but says
she owns between $100,001 and $250,000 in restricted Goldman shares
and between $50,001 and $100,000 in common shares that were awarded
as part of her compensation. She will likely be eligible to sell
the restricted shares immediately once Mr. Clayton takes office,
the report says.
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
March 08, 2017 17:50 ET (22:50 GMT)
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