January 25, 2017
The Donald Trump era as president is now underway with the inauguration just a few days behind us. As Senate hearings for many of his nominees are being conducted, similar themes are emerging around the nominees – including atypical candidates, learning curves in the world of governing, healthy amounts of political posturing by everyone involved and, in some cases, questions about readiness and fitness for duty.
While nothing is guaranteed at this early stage, Trump’s selection of Clayton to chair the Securities and Exchange Commission (SEC) appears to be a solid choice. His nomination is generally seen as a positive move for both public companies and investors.
The New York Times describes him as a deal maker who is not well known in political circles. He has spent his entire career counseling corporate boards, advising financial institutions and directing some of the largest mergers and IPOs to completion. As such, he has an intimate understanding of the issues and challenges companies face when complying with SEC regulations and has extensive experience in navigating the agency’s many departments.
So what is likely to change at the SEC? The previous chair, Mary Jo White, had a strong enforcement focus, requiring admissions of wrongdoing by defendants, and employing data analytics and technology as enforcement tools.
What will Clayton do? At the time of the announcement, he said his focus would be to provide confidence to investors and companies to invest in America, and to set policy that creates jobs.
Senator Tom Cotton (R-Arkansas), the youngest member of the Senate and a member of the Senate Committee on Banking, Housing and Urban Affairs, has indicated his plans to support Clayton’s nomination. Cotton believes the SEC chair’s role is to “enforce rules, not create barriers.” He thinks Clayton will do just that by focusing on creating jobs, protecting investors and promoting growth. Clayton has certainly been in a position to know what matters most to organizations governed by the SEC, and he should bring an interesting, new perspective to the job.
Trump has said, “We need to undo the regulations stifling investment in American businesses, and restore oversight of the financial industry in a way that does not harm American workers.” It is quite likely that Clayton will take a good look at some of the rules to determine which ones might need changing around the edges, updating or less attention. The speed and significance of the changes he chooses to make will be interesting to watch.
There is still the issue of Clayton receiving Senate confirmation before taking on his new role. Any qualified nominee for this role will surely have conflicts of interest. Clayton’s situation might prove to be particularly interesting, given that he will now be policing companies that he previously represented, including, and in particular, Goldman Sachs, which happens to be his wife’s current employer.
Some predict the Senate hearings will be tough for that reason alone. If all goes relatively smoothly, you can expect to see Clayton assume the SEC role in late March/early April.
Want to know more about how the new Trump Administration is likely to impact investor relations, public companies, the capital markets and more? Click below to read other articles in our special Dix & Eaton blog series or ask me a Trump transition question.