June 22, 2020 / 9:49 PM / 15 days ago

Breakingviews - SEC chair becomes political toy at his own expense

The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

SAN FRANCISCO (Reuters Breakingviews) - The head of the U.S. Securities and Exchange Commission has accidentally shot himself in the political foot. Jay Clayton’s nomination for a U.S. Attorney role is in trouble amid a fight over the office. Democrats say the ex-corporate lawyer is at risk of becoming President Donald Trump’s pawn in unwanted probes. His ties to Wall Street also hurt. The appointment risks undermining Clayton’s good work.

The mild-mannered SEC chairman had been spared Washington controversy, gradually earning himself a reputation as a capable regulator since taking his post in 2017. The former M&A and capital markets attorney focused his government tenure on scams against retail investors and cracking down on cryptocurrency. He took on Tesla Chief Executive Elon Musk over tweets to take the electric-car maker private, which curried him favor in the court of public opinion. Last week, bankrupt Hertz Global dropped plans to sell shares after the SEC raised concerns.

That is the job the Washington-based watchdog is meant to do. But on Friday night, the apolitical Clayton was thrown into the Beltway’s political firestorm. Attorney General William Barr made the surprising announcement that the top U.S. prosecutor in Manhattan, Geoffrey Berman, was stepping down and Trump nominated Clayton to replace him. Berman refused to quit until Barr said Berman’s deputy would take over, though Clayton’s nomination is intact.

Even in the absence of the drama, Clayton’s appointment would be out of ordinary. Sure, he has gained experience in civil enforcement at the SEC. But he’s not a litigator and has no experience as a prosecutor. Trying criminal cases is a big part of the job, especially in relation to terrorism and mob-related prosecutions. And the Southern District of New York is notably investigating Trump associates, including the president’s personal attorney Rudy Giuliani, whose Ukrainian business dealings are under scrutiny, and Deutsche Bank, a former Clayton client, which is under money laundering probes. 

In the Washington swamp, Clayton had managed to get results. His nomination as U.S. attorney, which needs Senate confirmation, may not go through after his two home-state senators, Chuck Schumer and Kirsten Gillibrand, called on him to withdraw. But even being dragged through the political antics risk sullying an otherwise solid Washington tenure.


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