For years, the law firm of Sullivan & Cromwell touted the achievements of its partner Jay Clayton in a lengthy biography displayed on its website. Clayton, one of the most powerful attorneys on Wall Street, had worked on everything from the sale of the Atlanta Hawks to Goldman Sachs’ bailout to mortgage fraud settlements with several major financial institutions.
But then President Donald Trump nominated Clayton to chair the Securities and Exchange Commission, an agency tasked with policing Wall Street misconduct. Clayton’s bio all but disappeared from the Sullivan & Cromwell site ― trimmed from more than 800 words to less than 30.
It’s perfectly legal for a Wall Street lawyer to join the SEC. But Clayton’s relationship with the firm has raised questions about the agency’s ability to crack down on securities fraud. At his confirmation hearing last week, Sen. Elizabeth Warren (D-Mass.) noted that government ethics rules would bar Clayton from participating in any enforcement activity against a company that he previously represented as a lawyer ― or any company that chose to be represented by Sullivan & Cromwell in a future dispute with the SEC. The restrictions would last for the first two years of Clayton’s term as SEC chairman.
When the agency’s career staffers have investigated misconduct, its leaders ― four commissioners and the chairman ― vote on whether to issue fines or penalties. The commissioners are split evenly between Democrats and Republicans and often vote along partisan lines, resulting in a 2-2 tie, which is broken by the chair.
If Clayton is forced to sit out an enforcement decision, the result could be a deadlock that allows fraud to go unpunished. Like Clayton, President Barack Obama’s SEC chair Mary Jo White had previously worked as a prominent corporate attorney before joining the regulator. She recused herself from more than four dozen enforcement cases, according to the New York Times, leading some insiders to complain that her absence was resulting in weaker penalties and delaying agency business.
The Senate banking committee is expected to vote next week on whether to advance Clayton’s nomination to the Senate floor.
Here is the full text of Clayton’s Sullivan & Cromwell bio before it was all but deleted:
Jay Clayton’s practice involves public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters where multidisciplinary advice and experience is valued. Mr. Clayton also advises several high-net-worth families regarding their public and private investments.
- Castleton Commodities in its acquisition of Morgan Stanley’s global oil merchants business; and a consortium of investors in connection with the acquisition of Castleton from Louis Dreyfus and Highbridge
- An ownership group for the Atlanta Hawks NBA franchise in connection with the purchase and later sale of the franchise
- Ally Financial Inc. in the $4.2 billion sale of its operations in Europe and Latin America to General Motors (GM), as well as in the $4.1 billion sale of its Canadian auto finance business to the Royal Bank of Canada (RBC) and in the sale of its Mexican insurance business (ABA Seguros) to ACE Group
- TeliaSonera in connection with various transactions involving Turkcell and Megafon, including arrangements with Altimo and various other acquisitions and dispositions of telecom-related assets
- British Airways in its merger with Iberia and the formation of International Airlines Group and various other transactions
- Barclays Capital in connection with its purchase of assets of Lehman Brothers out of bankruptcy
- Goldman Sachs in connection with the investment of $5 billion by Berkshire Hathaway and the U.S. Treasury’s TARP Investment
- Bear Stearns in connection with the sale of Bear Stearns to JPMorgan Chase and related matters
- Goldman Sachs and affiliated funds in connection with various acquisitions and investments in companies involved in financial services, banking, telecom and other industries
- Capital Maritime in connection with the combination of Crude Carriers Corporation and Capital Product Partners L.P. and the formation of a container carrier joint venture with a private equity firm
- Michael Krasny (founder) in the $7.2 billion sale of CDW
- Altor Equity Partners in connection with various acquisitions and financing transactions
Capital Markets/Leveraged Finance
- Initial public offering of $25 billion by Alibaba Group Holding Limited
- Initial public offering of $190 million by Moelis & Company
- Initial public offering of $2.375 billion by Ally Financial and private placements of $3 billion and $1.3 billion of common stock in Ally Financial
- Initial public offering of $230 million by Blackhawk Network Holdings
- Initial public offering and multiple public and private offerings of equity, preferred and debt securities of Capital Product Partners L.P.
- Initial public offering of $380 million by Oaktree Capital Group
- Initial public offering of $150 million by Higher One
- Initial public offering of $260 million by Crude Carriers Corporation
- Initial public offering of $1.2 billion by Och-Ziff and follow-on offerings and refinancing
- $1 billion 144A equity offering by Oaktree Capital (the first issuer to use the GSTrUE/Portal Alliance trading procedures)
- Public offering of $6.0 billion of common stock and mandatory convertible preferred stock by Lehman Brothers
- Public and private offerings of $1.5 billion in equity and equity-linked securities of AMBAC
Corporate Governance, Regulatory and Contested Matters
- A large financial institution in connection with the settlement of mortgage related securities claims with the FHFA
- A large financial institution in connection with the settlement of mortgage related claims with the DOJ, HUD and FHFA
- A large financial institution in connection with a regulatory review of transactions in government securities
- A hedge fund in connection with a regulatory review of various credit market transactions
- A group of financial institutions in connection with their challenge to MBIA’s restructuring
- Ally Financial in connection with the $25 billion mortgage origination and servicing settlement with the DOJ, HUD and state attorneys general
- Eni and subsidiaries in connection with an FCPA investigation by the SEC and DOJ
- A financial institution in connection with a civil investigation of its ECN currency facility by the Federal Reserve Bank of New York
- The group of 100 general counsels of leading UK companies in connection with establishing audit protocols with the PCAOB
- A financial institution in connection with various issues arising from its employees’ membership on the boards of public and private companies
- Chambers Global: The World’s Leading Lawyers for Business (2008-2015)
- Chambers USA: America’s Leading Lawyers for Business (2006-2015)
- The Legal 500 United States (2009-2015)
- IFLR1000 (2008-2017)
- New York Super Lawyers (2008-2015)
- The Lawdragon 500: Leading Lawyers in America (2006-2010)
- The Best Lawyers in America (2014-2017)
- Co-Author “We Don’t Need a Crisis to Act Unitedly Against Cyber Threats” Knowledge@Wharton, June 2015
- Chair of the Drafting Committee for “The FCPA and its Impact on International Business Transactions – Should Anything be Done to Minimize the Consequences of the U.S.’s Unique Position on Combating Offshore Corruption?” International Business Transactions Committee, New York City Bar Association, December 2011
- Co-Author “USA 10-K: Why America Needs an Annual Report” Knowledge@Wharton, July 2012
Other Professional Activities
- Lecturer in Law, University of Pennsylvania Law School (”M&A Through the Business Cycle,” 2009-2015)
This article has been updated to provide additional detail on Mary Jo White’s tenure as SEC chair.