January 5, 2017
The Next SEC Chair? A Deal Lawyer!
Wow! That was fast. I had a bunch of blogs ready to run leading up to President Trump selecting a SEC Chair. Just yesterday, I blogged about Carl Icahn providing input. And now Sullivan & Cromwell’s Jay Clayton has been tapped. Jay won’t likely need to clear much of a hurdle during his Senate confirmation hearings – but given Trump’s posturing during his campaign, he will need to sit through questions about his ties to Goldman Sachs – including his wife’s job there (as noted in this Reuters article).
Some of other candidates also were from big law firms – this article notes that Trump met with Gibson Dunn’s Debra Wong Yang. But Debra doesn’t do deals. Jay’s bio indicates he does more than deals, but he’s primarily a deal guy. You have to go a ways back to find the last SEC Chair who was a deal lawyer – Chris Cox (who was a deal lawyer before he became a Congressman).
And it’s been a long time – a real long time – since the last SEC Chair was plucked directly from a law firm. Of course, that background is quite common for a Division Director. Richard Breeden had been a law firm lawyer, but he had two gigs between firm life & becoming Chair. The closest comparison is Ray Garrett, Jr., who left a Chicago firm to become SEC Chair. Garrett had been head of Corp Fin a few years before he left his firm to lead the Commission in the early ’70s.
It’s also been a long time since someone was appointed who wasn’t previously publicly visible (this MarketWatch article notes that the wire services don’t even have Jay’s pic on file). Let me review the Chairs over my career: Shad, Breeden, Levitt, Pitt, Donaldson, Cox, Schapiro and White – all had been in the public eye before ascending to SEC Chair. Ruder is the exception here. But I’m not suggesting that visibility is some sort of SEC Chair qualification. It isn’t.
Some folks asked me yesterday what was “normal” for a SEC Chair. There really isn’t a standard for the job – the backgrounds of former SEC Chairs are all over the lot. A few have worked at the SEC before. Chair Levitt wasn’t a lawyer. Chair White was a prosecutor. Chair Ruder was an academic. Chair Cox was a Congressman. And it’s not the sort of appointment where you read tea leaves from past writings. Obviously, someone’s background plays a role – but the biggest indicator of what a Chair will do is looking at the general direction the President points to…
– Broc Romanek