Jay Clayton--the man chosen by President Donald J. Trump to lead the nation's agency that polices Wall Street--and the team he's assembled are expected to continue enforcement but also shift priorities to finance and cybersecurity issues.
In June, the Securities and Exchange Commission (SEC) announced the appointment of co-directors of the Division of Enforcement, a key unit of the agency. Acting Director of the Division of Enforcement Stephanie Avakian and former federal prosecutor Steven Peikin will be sharing the role, something that's not unprecedented. (In 2013, Acting Director George Canellos and former federal prosecutor Andrew Ceresney, were named to the dual role under Clayton's predecessor Mary Jo White.) And the previous month, Bill Hinman was named director of the agency's Corporation Finance division.
"These appointments are very encouraging for SEC watchers hoping for an active and independent commission," says N. Peter Rasmussen, a senior legal editor for Bloomberg BNA.
But few expect Clayton, who brings with him a background as a deal-making attorney, to carry a big stick.
Denver Edwards, a principal at the law firm of Bressler, Amery & Ross and a former SEC attorney, says Clayton's leadership will be "more focused on regulatory and finance issues, rather than enforcement issues."
Edwards maps out Clayton's objectives for the SEC as:
* capital formation (IPOs),
* efficient markets (regulatory rollback),
* investor protection (enforcement).
"These goals are consistent with the SEC's mission," he says." Strong corporate governance (system of rules, practices and processes that balances the interests of stakeholders) and board leadership will be necessary to achieve them."
But, Edwards adds, "It would be a mistake to think that Clayton's SEC will be soft on enforcement. Clayton states that he will 'vigorously enforce' the law, but will seek to target individual bad actors because he believes individual accountability drives behavior more than corporate accountability. Expect fewer prosecutions against companies."
Indeed, under previous SEC chairman White, the agency had a strong focus on enforcement actions.
A report by NYU Pollack Center for Law & Business, in collaboration with Cornerstone Research, found since April 2013 when White was sworn in, SEC enforcement actions have jumped.
According to the report, the increase in SEC actions against public company-related defendants from FY 2013 through FY 2016 was 130% as compared...