Jay Clayton

Wall Street Mega-Lawyer

Trump’s Nominee for Chair of Securities and Exchange Commission

Jay Clayton is President Donald Trump’s nominee for Chairman of the U.S. Securities and Exchange Commission. A partner at Sullivan & Cromwell, a law firm “more closely associated with Wall Street than perhaps any other,” Clayton has built his career representing major multinational companies like Bear Stearns, Lehman Brothers, and Goldman Sachs to name a few.

If confirmed, Clayton will be required to recuse himself “for one year from voting on any particular matter if a firm or individual is being represented by” his law firm, and “for a year from working on matters that involve clients he represented in the past year.” He also will be “recused indefinitely if a deal he previously worked on comes up during SEC litigation.”  Based on an analysis of “recent” and “selected” Sullivan & Cromwell clients, it is estimated that Clayton will need to recuse himself from cases involving nearly one-third of the institutions on the Financial Stability Board’s list of “global systemically important banks.” But, that number could be much larger as there is no way of determining the identities of all of Clayton’s clients and the scope of his representation of those clients, without full disclosure by him.

In addition to being involved in controversial deals that wiped out shareholder wealth, and others that set off “global market turmoil that roiled the financial world” during the 2008 financial crisis, Clayton has “advocated for less zealous enforcement of the Foreign Corrupt Practices Act” (FCPA), which “prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.” He even oversaw a report that attacked the Obama administration for enforcing the law, claiming its application was “‘causing lasting harm to the competitiveness of U.S. regulated companies.’” To hear him tell it, American businesses just cannot compete if they are not bribing foreign governments. It is difficult to see how he could possibly be trusted to enforce these and other important laws if he considers them mere obstacles around which businesses must navigate.

Equally concerning, Clayton represents an extension of the Trump administration’s troubling pattern of nominating individuals with Russian ties. His law firm, Sullivan & Cromwell, has advised numerous entities including companies doing business with Russian oligarchs, and the Russian government, on financial and oil and gas projects. It also represented Deutsche Bank on a consent order related to the bank’s role in a $10 billion “Russian money laundering scheme.” If that scandal-plagued financial institution sounds familiar, it should: The Trump Organization has enormous debt “with Deutsche Bank, which loaned it more than $364 million in recent years and more than $3 billion since the 1990s.”

The SEC’s vitally important charge of protecting hard-working Americans and their investments, retirement and otherwise, from exploitation by Wall Street is sacrosanct, and would be threatened if an individual like Clayton–someone incapable of performing the basic duties of the job because he has too many conflicts–manages to secure Senate confirmation.


Highlights

Record at Sullivan & Cromwell LLP

  • Clayton’s law firm, Sullivan & Cromwell LLP, “is more closely associated with Wall Street than perhaps any other law firm.”
  • At Sullivan & Cromwell LLP Clayton has represented numerous companies, including Bear Stearns, Lehman Brothers, Barclays PLC, Barclays Capital, Goldman Sachs, and Och-Ziff. He “helped several large banks settle mortgage-backed securities claims by the Justice Department and other regulators.” During the 2008 financial crisis he “worked on Barclay Capital’s acquisition of Lehman Brothers’ assets and JP Morgan Chase’s purchase of Bear Stearns.” He represented Goldman Sachs when it was bailed out “during the peak of the credit crisis in …2008.” More specifically, he represented “Goldman Sachs in connection with the investment of $5 billion by Berkshire Hathaway and the U.S. Treasury’s TARP Investment.”
  • Clayton served as a lead attorney advising Bear Stearns when it was acquired by JP Morgan Chase & Co. “at a fire-sale price” that wiped out most shareholder wealth in a controversial deal in which the Federal Reserve agreed to absorb most losses if JP Morgan Chase & Co. lost billions of dollars as a result of purchasing Bear Stearns.
  • During the 2008 financial crisis Clayton “worked on Barclay Capital’s acquisition of Lehman Brothers’ assets.” He represented “Barclays Capital in buying the assets of the bankrupt Lehman Bros.” Barclays was interested in buying Lehman Brothers before Lehman went bankrupt, but “pulled out of deal talks,” which spelled the end for Lehman and set “off global market turmoil that roiled the financial world.” Days later “a bankruptcy judge approved a plan…under which Lehman Brothers” sold “its investment banking and trading businesses to… Barclays” at a greatly reduced price. “In response…the Bush administration announced…the biggest proposed government intervention in financial markets since the Great Depression.”
  • Clayton was part of the team from Sullivan & Cromwell LLC that represented the underwriters, including “Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc.” on the initial public offering for “Chinese online marketplace” Alibaba, which is currently “under investigation by the SEC over its accounting practices.” He has also represented Chinese retailer and wholesaler Suning Commerce.
  • Sullivan and Cromwell has advised numerous entities, including the Russian government and companies operated by oligarchs, on financial and oil and gas projects in Russia. It also represented Deutsche Bank on a consent order related to the bank’s role in a $10 billion “Russian money laundering scheme.” Sullivan and Cromwell has lawyers who have been admitted to the bar in Russia.
  • Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from numerous Sullivan & Cromwell clients with ties to China and Russia, including Chinese and Russian state-owned companies.
  • Sullivan and Cromwell has recently represented clients who have violated sanctions against Iran.
  • Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” for a client that violated sanctions by selling wireless equipment in Iran. The company said it “‘overlooked emails’ that showed the sales were happening.”
  • Clayton “advocated for less zealous enforcement of the Foreign Corrupt Practices Act” (FCPA), which “prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.” He oversaw a report that attacked the Obama administration for enforcing it, claiming the enforcement was “‘causing lasting harm to the competitiveness of U.S. regulated companies.’” He “wrote that the law placed US companies at a competitive disadvantage” and “‘places significant costs on companies that are subject to the FCPA as compared to their competitors.’” Clayton also “helped draft comment letters to the SEC that advocated for less onerous restrictions for foreign public companies.”
  • Clayton “represented Och-Ziff Capital Management,” which is a hedge fund that got caught paying bribes, and an Italian oil company when it got caught paying bribes. He “helped secure a $365 million bribery settlement with the SEC on behalf of Italian oil giant Eni” and lists “Eni and subsidiaries in connection with an FCPA investigation by the SEC and DOJ” as representative of his work for marketing purposes.
  • Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” for a client who was the founder and CEO of “the biggest handler of subprime mortgages in the United States.” This company was caught using “abusive servicing practices” and was fined $2 million in 2016 by the SEC. The founder and CEO was forced out of the company in a settlement with the New York Department of Financial Services.
  • Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from a hedge fund manager that has been involved in insider trading and fined by the SEC for pay-to-play violations.
  • Ally Financial was investigated for “bank-related foreclosure abuses…following the robo-signing debacle of fall 2010.” Clayton represented “Ally Financial in its part of the massive $25 billion settlement with the Department of Justice, the Department of Housing and Urban Development and state attorneys general over robo-signing.” He lists his role in this case as representative of his work for marketing purposes.
  • Clayton considers “Sarbanes-Oxley and Dodd-Frank…[to be] faulty and lacking focus.”
  • Clayton is not “a fan of regulations that would impose cybersecurity mandates on individual firms.”
  • Clayton, if appointed SEC chairman, will have to recuse himself “for one year from voting on any particular matter if a firm or individual is being represented by Sullivan & Cromwell” and “be recused for a year from working on matters that involve clients he represented in the past year.” He will also have to be “recused indefinitely if a deal he previously worked on comes up during SEC litigation.” Based on Sullivan & Cromwell’s “recent” clients, Jay Clayton would have to recuse himself for nearly one year from matters involving at least one-third of the institutions on the Financial Stability Board’s list of global systemically important banks.

The Details

Record at Sullivan & Cromwell LLP

Sullivan & Cromwell LLP “is more closely associated with Wall Street than perhaps any other law firm.”

“Sullivan & Cromwell is a key outside legal adviser to Goldman [Sachs] and is more closely associated with Wall Street than perhaps any other law firm, though Mr. Clayton’s focus has largely been around capital markets.” [Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017.]

At Sullivan & Cromwell LLP Clayton has represented numerous companies, including Bear Stearns, Lehman Brothers, Barclays PLC, Barclays Capital, Goldman Sachs, and Och-Ziff. He “helped several large banks settle mortgage-backed securities claims by the Justice Department and other regulators.” During the 2008 financial crisis he “worked on Barclay Capital’s acquisition of Lehman Brothers’ assets and JP Morgan Chase’s purchase of Bear Stearns.” He represented Goldman Sachs when it was bailed out “during the peak of the credit crisis in… 2008.” More specifically, he represented “Goldman Sachs in connection with the investment of $5 billion by Berkshire Hathaway and the U.S. Treasury’s TARP Investment.”

Clayton, during his time at Sullivan & Cromwell LLP, has worked extensively on “public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters where multidisciplinary advice and experience is valued.”

His clients and “representative engagements” at this firm have included Lehman Brothers, Barclays PLC, “Castleton Commodities, Atlanta Hawks, Ally Financial Inc., British Airways, Barclays Capital, Goldman Sachs, Alibaba Group, Oaktree Capital Group, Och-Ziff, Moelis & Company.”

During the 2008 financial crisis he “worked on Barclay Capital’s acquisition of Lehman Brothers’ assets and JP Morgan Chase’s purchase of Bear Stearns.”

“Mr. Clayton…played a key role in…crisis-era matters related to Bear Stearns’s sale to J.P. Morgan Chase & Co., Wachovia Corp.’s sale to Wells Fargo & Co. and troubles facing Lehman Brothers.” [Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017; and “Lawyers, Jay Clayton,” sullcrom.com, accessed March 4, 2017.]

He advised “Barclays Capital in buying the assets of the bankrupt Lehman Bros. in 2008 and Bear Stearns in its fire sale to JPMorgan Chase in 2007.” [Leslie Picker, “Donald Trump Nominates Wall Street Lawyer to Head S.E.C.,” New York Times, January 8, 2017.]

Clayton and Michell Eitel, in 2008, served “as lead attorneys” advising Bear Stearns when it was acquired by JP Morgan Chase & Co. [Ariel Acosta, “JPMorgan to acquire Bear Stearns for $2.00 per share,” SNL Bank Weekly Northeast Edition, March 24, 2008.]

He “advised Bear Stearns when its assets were sold to JPMorgan Chase & Co in March 2008 in a deal that was facilitated by Federal Reserve Bank financing and one that averted the collapse of the institution.” [Ronald Orol, “Trump Choice Clayton to Bring Deal-Making, IPO Experience to SEC,” The Deal Pipeline, January 4, 2017.]

Clayton represented “Goldman Sachs in connection with the investment of $5 billion by Berkshire Hathaway and the U.S. Treasury’s TARP Investment.” [“Lawyers, Jay Clayton,” sullcrom.com, accessed March 4, 2017.]

He “represented Goldman when it received a capital infusion from the U.S. Government’s crisis-era Troubled Asset Relief Program.” [Ronald Orol, “Trump Choice Clayton to Bring Deal-Making, IPO Experience to SEC,” The Deal Pipeline, January 4, 2017.]

Goldman Sachs received $10 billion in TARP funds. It paid $4.8 billion in bonuses in 2008, yet it did not repay the TARP funds until 2009. [Michael Corkery, “Goldman Sachs: The Cuomo Report’s Bonus Breakdown,” Wall Street Journal, July 30, 2009; and Goldman Sachs, “Goldman Sachs Pays $1.1 Billion to Redeem TARP Warrants,” news release, July 22, 2009.]

In his work with Goldman Sachs Clayton represented the firm “when it received a $5 billion investment from billionaire Warren Buffett’s company during the peak of the credit crisis in September 2008.” [Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017.]

Additionally, Clayton has “represented large financial institutions looking to settle mortgage-related claims with authorities.” [Bouree Lam, “Trump Picks Jay Clayton to Head the SEC,” The Atlantic, January 4, 2017.]

He “helped several large banks settle mortgage-backed securities claims by the Justice Department and other regulators.” [Frank Fuhrig, “1st Lead,” Deutsche Presse-Agentur, January 4, 2017.]

In 2011 Clayton advised Goldman Sachs and Morgan Stanley as the underwriters for the initial public offering of “Los Angeles-based private equity firm Oaktree Capital Management LP.” [Max Frumes, “Oaktree opts for limited IPO,” The Daily Deal, June 20, 2011.]

Oaktree “invests mainly in distressed debt along with large private equity and real estate funds.” [Max Frumes, “Oaktree opts for limited IPO,” The Daily Deal, June 20, 2011.]

At the time of initial public offering, “besides distressed debt, Oaktree’s business” covered “a broad range, including corporate debt, which…[accounted] for 27% of its business; control investing, 19%; convertible securities, 11%; real estate, 6% of its investments; and listed equities, 1%.” [David Holley and David Carey, “Oaktree hopes to list between $43 and $46 per common unit,” The Deal Pipeline, March 30, 2012.]

Clayton served as a lead attorney advising Bear Stearns when it was acquired by JP Morgan Chase & Co. “at a fire-sale price” that wiped out most shareholder wealth in a controversial deal in which the Federal Reserve agreed to absorb most losses if JP Morgan Chase & Co. lost billions of dollars as a result of purchasing Bear Stearns.

JPMorgan Chase & Co acquired Bear Stearns “at a fire-sale price, after the overnight financing keeping the investment bank afloat dried up,” so most shareholder wealth was wiped out. [Talk of the Nation, “Bear Stearns Bought Out by JP Morgan Chase,” NPR, March 17, 2008; and Steve Schaefer, “A Look Back At Bear Stearns, Five Years After Its Shotgun Marriage To JPMorgan,” Forbes, March 14, 2013.]

Clayton and Michell Eitel, in 2008, served “as lead attorneys” advising Bear Stearns when it was acquired by JP Morgan Chase & Co. [Ariel Acosta, “JPMorgan to acquire Bear Stearns for $2.00 per share,” SNL Bank Weekly Northeast Edition, March 24, 2008.]

Clayton “advised Bear Stearns when its assets were sold to JPMorgan Chase & Co in March 2008 in a deal that was facilitated by Federal Reserve Bank financing and one that averted the collapse of the institution.” [Ronald Orol, “Trump Choice Clayton to Bring Deal-Making, IPO Experience to SEC,” The Deal Pipeline, January 4, 2017.]

“The Federal Reserve Bank of New York’s $30 billion special financing associated with the transaction” was “amended so that JPMorgan will bear the first $1 billion of any losses associated with the Bear Stearns assets being financed. The Fed will fund the remaining $29 billion on a nonrecourse basis to JPMorgan.” [Zach Davis, “JPMorgan boosts Bear Stearns bid to $10 a share,” SNL Securities & Investments M&A, April 1, 2008.]

During the 2008 financial crisis Clayton “worked on Barclay Capital’s acquisition of Lehman Brothers’ assets.” He represented “Barclays Capital in buying the assets of the bankrupt Lehman Bros.” Barclays was interested in buying Lehman Brothers before Lehman went bankrupt, but “pulled out of deal talks,” which spelled the end for Lehman and set “off global market turmoil that roiled the financial world.” Days later “a bankruptcy judge approved a plan…under which Lehman Brothers” sold “its investment banking and trading businesses to… Barclays” at a greatly reduced price. “In response…the Bush administration announced…the biggest proposed government intervention in financial markets since the Great Depression.”

During the 2008 financial crisis Clayton “worked on Barclay Capital’s acquisition of Lehman Brothers’ assets.” [Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017; and “Lawyers, Jay Clayton,” sullcrom.com, accessed March 4, 2017.]

He represented “Barclays Capital in buying the assets of the bankrupt Lehman Bros. in 2008.” [Leslie Picker, “Donald Trump Nominates Wall Street Lawyer to Head S.E.C.,” New York Times, January 8, 2017.]

Barclays and another bank were interested in buying Lehman Brothers, but “pulled out of deal talks,” which spelled the end for Lehman Brothers. After these potential buyers walked away from the deal Lehman Brothers went bankrupt. When Lehman Brothers “filed for bankruptcy protection” it became “the biggest-ever Chapter 11 case” and set “off global market turmoil that roiled the financial world.” [Michael de la Merced, “Lehman to Pay Barclays $1.3 Billion to Settle Suit,” New York Times, June 15, 2015; Nick Mathiason, “Three Weeks That Changed the World,” The Guardian (United Kingdom), December 27, 2008; and David Ellis, “Wall Street on Red Alert,” CNN Money, September 15, 2008.]

Days later “a bankruptcy judge approved a plan…under which Lehman Brothers” sold “its investment banking and trading businesses to the British bank Barclays. The deal was said to be worth $1.75 billion earlier” that “week but the value” dropped “closer to $1.35 billion,” which included “the $960 million price tag on Lehman’s Midtown Manhattan office tower.”

“In response to the extraordinary events of the week, the Bush administration announced…the biggest proposed government intervention in financial markets since the Great Depression.” [Wire Reporters “Judge OKs Lehman Brothers sale to BarclaysAssociated Press, September 20, 2008.]

Clayton was part of the team from Sullivan & Cromwell LLC that represented the underwriters, including “Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc.” on the initial public offering for “Chinese online marketplace” Alibaba, which is currently “under investigation by the SEC over its accounting practices.” He has also represented Chinese retailer and wholesaler Suning Commerce.

Clayton was part of the team from Sullivan & Cromwell LLC that represented the underwriters, including “Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc.” on the initial public offering for “Chinese online marketplace” Alibaba Group Holding Ltd. [Ellen Rosen, “Simpson Thacher, Sullivan & Cromwell Work on Alibaba IPO,” Bloomberg, May 9, 2014.]

“The Chinese e-commerce giant is under investigation by the SEC over its accounting practices.” [Leslie Picker, “Donald Trump Nominates Wall Street Lawyer to Head S.E.C.,” New York Times, January 8, 2017.]

Sullivan & Cromwell LLC, in 2015, represented Suning Commerce in an agreement in which Alibaba invested $4.63 billion in Suning, “giving it a 19.9% stake in the company, and becoming the second largest shareholder. Concurrently Suning…invested $2.2bn…in Alibaba giving it 1.1% interest in the company.” Sullivan & Cromwell LLC “fielded a cross-border team led by Hong Kong partner Kay Ian Ng and New York-based partner Jay Clayton” to represent Suning. Chinese retailer and wholesaler Suning Commerce “operates 1,600 outlets across 600 Chinese cities.” [Frances Ivens, “Simpson Thacher and Sullivan lead on Alibaba’s $6.8bn electronics alliance,” Legal Week, August 11, 2015.]

Sullivan and Cromwell has advised numerous entities, including the Russian government and companies operated by oligarchs, on financial and oil and gas projects in Russia. It also represented Deutsche Bank on a consent order related to the bank’s role in a $10 billion “Russian money laundering scheme.” Sullivan and Cromwell has lawyers who have been admitted to the bar in Russia.

Sullivan and Cromwell has advised on numerous oil and gas projects in Russia. It has been counsel to “the consortium, which includes KazMunayGas and the Russian Federation, in the financing of the Caspian Pipeline Consortium Project (Kazakhstan/Russia),” and it has advised in Russia and Kazakhstan “Tengizchevroil LLP (TCO) in its $16 billion project financing to fund the $42.5 billion expansion and modification of its upstream operations” in Kazakhstan. TCO is a “partnership comprising affiliates of Chevron, ExxonMobil, KazMunayGas, the Kazakh state oil company, and Lukoil. S&C has advised TCO on numerous other financings since 2004” as well.

Sullivan and Cromwell worked on the “CPC pipeline consortium,” which was a “$500 million expansion financing (Russia/Kazakhstan),” and the “South Stream gas pipeline project (Russia/Turkey/Bulgaria).” The South Stream project is “a massive pipeline designed to bring gas from Russia to southern and central Europe.”

Sullivan and Cromwell lawyers Mariya (Popova) Osadchaya and Maria Slobodchikova have been admitted to the bar in Russia.

Erik Lindauer, which is of counsel at Sullivan and Cromwell, “spent an extended period working in Moscow with American and Russian bankers as the legal advisor to the Government Securities Working Group of the Russian-American Bankers Forum,” and Sullivan and Cromwell partner Marc DeLeeuw “represented The Bank of New York in investigations and civil actions concerning the Bank’s business with certain Russian customers.”

Sullivan and Cromwell partner Vanessa K. Blackmore advised on “IPOs/Listings” and “Rights Issues/Secondary Offerings” Mail.ru Group Limited, which is Russia’s largest Internet company, and on “IPOs/Listings” United Company RUSAL, which is a large Russian aluminum company. The president of United Company RUSAL is oligarch Oleg Deripaska. [“Our Frankfurt Office,” Sullivan & Cromwell LLP, 2014, accessed March 4, 2017; Ana Laura Zain, “Which Sites Capture The Most Screen Time in Russia?,” comScore, April 12, 2013; Martin Ritchie, “Hongqiao Gets to Top of the World and Sinks Most Since IPO,” Bloomberg, August 31, 2015; “Lawyers,” sullcrom.com, accessed March 4, 2017; “Management,” rusal.ru, accessed March 4, 2017; “Experience in the Oil & Gas Industry,” Sullivan & Cromwell LLP, 2016, accessed March 8, 2017; Karlee Weinmann, “Project Finance Group Of The Year: Sullivan & Cromwell,” Law360, January 26, 2015.]

Primorsk International Shipping Ltd., which was “owned by Apington Investments Ltd., a British Virgin Islands holding company” that was “controlled by Russian shipping executive Alexander Kirilichev,” in 2016 sold “its nine-ship tanker fleet to the largest shipping company in Russia for $215 million, completing the transfer of all its assets in a Chapter 11 auction.” The buyer was the highest bidder. “‘We’re satisfied with the results and feel that it is the best practical outcome in light of the current market environment,’ Andrew Dietderich of Sullivan Cromwell LLP, representing the debtors, said.” [Vince Sullivan, “Primorsk To Sell Tanker Fleet To Russian Firm For $215M,” Law360, July 5, 2016; and Patrick Fitzgerald, “Arctic Oil Shipper Primorsk International Files for Bankruptcy,” Wall Street Journal, January 18, 2016.]

Sullivan and Cromwell, in 2013, advised “Goldman Sachs as financial advisor to Metro Group on the sale of its hypermarket retail operations in Poland, Romania, Russia and Ukraine to Auchan SA for approximately €1.08 billion.” [“Our Frankfurt Office,” Sullivan & Cromwell LLP, 2014, accessed March 4, 2017.]

Sullivan and Cromwell partner Samuel Seymour was the attorney of record for Deutsche Bank on a consent order related to the bank’s role in a $10 billion “Russian money laundering scheme.” In January of 2017 the New York State Department of Financial Services levied a $425 million fine against Deutsche Bank for its involvement in brokering “offsetting trades” that were “highly suggestive of financial crime.” Clients in Deutsche Bank’s Moscow office requested purchases of Russian blue chip stocks, in rubles, and once obtained, the London desk would sell the “identical Russian blue chip stock in the same quantity and at the same price through Deutsche Bank’s London branch.” Beyond having no financial reason for the trades, “a number” of the selling counterparties were in places like Cyprus, a well-known haven for hiding Russian money. The clients often lost money on these trades due to fees. [“Consent Order,” In the Matter of NY Deutsche Bank AG and Deutsche Bank AG New York Branch, January 30, 2017; Jethro Mullen, “Deutsche Bank Fined for $10 Billion Russian Money-Laundering Scheme,” CNN Money, January 31, 2017, and Luke Harding, “Revealed: The $2bn Offshore Trail That Leads to Vladimir Putin,” The Guardian (United Kingdom), April 3, 2016.]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from numerous Sullivan & Cromwell clients with ties to China and Russia, including Chinese and Russian state-owned companies.

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client Vector Group. “Vector Group President and CEO Howard Lorber is one of many Wall Street and real estate moguls appointed to Trump’s team of economic advisers. Lorber, named as one of Trump’s ‘best friends’…brought Trump to Moscow in 1996, because they were in talks to build a luxury residential tower. The project was never realized.” [Dailymail.com Reporter “Who’s next? Politicians, business moguls and other Cabinet contenders stroll through the gilded entrance of Trump Tower to meet with The Donald’s transition team – including energy secretary pick Rick Perry,” The Daily Mail (United Kingdom), December 13, 2016; and Jay Clayton, OGE Form, March 2017.]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client SoftBank. According to Alexsey Repik, the CEO of the “Business Russia” association, SoftBank CEO Masayoshi Son “‘said that Russia was his second great interest.’” SoftBank, in 2016, announced the “signing of a joint Memorandum of Understanding (MOU)” with a Chinese state-owned “power transmission company State Grid Corporation of China (‘SGCC’), Korean public power leader Korea Electric Power Corporation (‘KEPCO’),” and the state-controlled “operator of Russia’s energy grid PJSC ROSSETI (‘ROSSETI’) on a framework to cooperate on research and planning to promote an interconnected electric power grid spanning Northeast Asia.” [SoftBank, “Press Release,” March 30, 2016; “Japan’s Softbank CEO Calls Russia ‘Second Interest’ After US,” Get Russia, December 16, 2016; and Jay Clayton, OGE Form, March 2017.]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client Valeant Pharmaceuticals, which has at least one Russian subsidiary. “Valeant was the “pioneer” of “drug-price gouging” and has used “every trick in the financial-engineering handbook. In 2010, it merged with a Canadian company, in order to bring down its tax rate, and it sheltered its intellectual property in tax havens like Luxembourg. It used opaque accounting methods that made it hard for investors to judge how well acquired companies were doing. To ward off competition from generic drugs, Valeant entered into a complicated relationship with a mail-order pharmacy called Philidor.” In 2013 “Valeant acquired Natur Produkt International, JSC (‘Natur Produkt’), a specialty pharmaceutical company in Russia.” [James Surowiecki, “The Roll-Up Racket,” The New Yorker, April 4, 2016; Valeant Pharmaceutical Company, “2014 Annual Report,” 2014, and Jay Clayton, OGE Form, March 2017.]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client Evercore Partners, which is a merger-advisory firm that “advised a group of billionaires who were the sellers in a deal where [Russian] oil producer OAO Rosneft paid more than $25 billion for a TNK-BP stake.” [Jason Corcoran and Sonali Basak, “Evercore Halts Dealmaking With VTB Capital Amid Sanctions,” Bloomberg Business, July 17, 2015; and Jay Clayton, OGE Form, March 2017.]

Sullivan and Cromwell has recently represented clients who have violated sanctions against Iran.

Sullivan and Cromwell lawyer Karen Patton Seymour represented BNP Paribas “in connection with a record $8.9 billion settlement resolving claims that it violated sanctions against Sudan, Cuba and Iran. U.S. District Judge Lorna Schofield in Manhattan formally ordered the French bank to forfeit $8.83 billion and pay a $140 million fine as part of a sentence that also called for BNP Paribas to enhance its compliance procedures and policies.” [“Lawyers, Karen Patton Seymour,” sullcrom.com, accessed March 4, 2017; Carlo Nassetti, “Sullivan & Cromwell leads on BNP Paribas’ Cuba Litigation Crisis,” The Lawyer, May 12, 2015; and Nate Raymond, “BNP Paribas sentenced in $8.9 billion accord over sanctions violations,” Reuters, May 1, 2015.]

“Slaughter and May and Sullivan & Cromwell…assisted Standard Chartered Bank to come to a final settlement with US authorities over allegations that it had breached US sanctions policy. The settlement follows allegations that Standard Chartered concealed £250bn around 60,000 transactions for Iranian clients totaling $250bn between 2001 and 2007.” [Sam Chadderton, “Slaughter, Sullivan & Cromwell advise Standard Chartered on Iran payments fine,” The Lawyer, December 11, 2012]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” for a client that violated sanctions by selling wireless equipment in Iran. The company said it “‘overlooked emails’ that showed the sales were happening.”

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client Ubiquiti Networks, Inc., which makes wireless equipment. “Two of its Middle East distributors…sold products into Iran.” A SEC “filing said Ubiquiti’s executives originally did not know this was a problem, as the company ‘lacked sufficient familiarity’ with export laws due to the ‘inexperience of our management team in these matters.’ Even after putting policies in place to prevent products from being sold into Iran, the company acknowledged its distributors still sold there for a period of time and Ubiquiti ‘overlooked emails’ that showed the sales were happening, according to the…filings. The U.S. Office of Export Enforcement issued the company a warning letter and did not impose any financial penalties.” [Diana Samuels, “Controversies complicate sale of Memphis Grizzlies to Robert Pera,” Silicon Valley/San Jose Business Journal, August 14, 2012; and Jay Clayton, OGE Form, March 2017.]

Clayton “advocated for less zealous enforcement of the Foreign Corrupt Practices Act” (FCPA), which “prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.” He oversaw a report that attacked the Obama administration for enforcing it, claiming the enforcement was “‘causing lasting harm to the competitiveness of U.S. regulated companies.’” He “wrote that the law placed US companies at a competitive disadvantage” and “‘places significant costs on companies that are subject to the FCPA as compared to their competitors.’” Clayton also “helped draft comment letters to the SEC that advocated for less onerous restrictions for foreign public companies.”

Clayton “helped draft comment letters to the SEC that advocated for less onerous restrictions for foreign public companies, and also participated in a 2011 article which advocated for less zealous enforcement of the Foreign Corrupt Practices Act,” which “was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.” It “generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.” [Sarah N. Lynch, “Trump’s SEC pick Clayton points to capital formation, not enforcement,” Reuters, January 5, 2017; “Foreign Corrupt Practices Act,” U.S. Department of Justice website, accessed March 4, 2017; and “SEC Spotlight: Foreign Corrupt Practices Act,” U.S. Securities and Exchange Commission website, accessed March 4, 2017]

In 2011, Clayton “oversaw a…New York State Bar Association report attacking the Obama-era SEC and Justice Department for ‘zealous’ enforcement of laws aimed at American corporate bribery of foreign officials.” [Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017.]

The report “complains about the federal government’s broad enforcement of that law.” [Steve Goldstein, “Trump pick for SEC chief may target foreign bribery enforcement,” MarketWatch, January 4, 2017.]

It concludes that the actions of the SEC and Justice Department in the Obama administration “were ‘causing lasting harm to the competitiveness of U.S. regulated companies and the U.S. capital markets.’” [Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017.]

The report makes several claims about the perceived unworkability and cumbersomeness of the FCPA. It says, “due to the increased focus on enforcement” of the FCPA “companies are essentially required to ask probing and uncomfortable questions of any foreign corporation that they intend to acquire or with which they intend to merge or partner,” which “can create discomfort or distrust between the U.S. regulated company and any foreign counterpart offended by the FCPA line of questioning.”

The report also claims that “there is a realistic possibility that the FCPA may be exacerbating the problem of corruption.” By “restricting U.S.-regulated firms from entering jurisdictions in which making improper payments to government officials is or may become more prevalent allows other companies – some of which operate under business principles and government regulations less transparent and public-regarding than the principles and regulations under which U.S. firms operate – to dominate those jurisdictions.”

This report concludes that “the costs of pursuing such an approach are substantial and, in certain cases, irreversible and, consequently, a realignment of the U.S. position in the global anti-bribery enforcement regime is necessary.” [“The FCPA and Its Impact on International Business Transactions,” New York City Bar, December 2011.]

“Mr Clayton and Mr Trump may have bonded over their shared disapproval of the US anti-bribery law, the Foreign Corrupt Practices Act. Mr Trump in 2012 criticised the law as ‘horrible’ and said ‘it should be changed.’ One year earlier, Mr Clayton wrote that the law placed US companies at a competitive disadvantage.” Clayton also wrote that the Foreign Corrupt Practices Act “‘places significant costs on companies that are subject to the FCPA as compared to their competitors’” and that the “‘United States should re-evaluate its approach to the problem of foreign corruption.’” He also wrote that the “law might even be making global corruption worse by discouraging US companies from entering some markets, thus leaving them to foreign competitors with fewer scruples about bribery.” [David Lynch, “Trump nominates Wall Street lawyer to head SEC,” Financial Times, January 4, 2017.]

Clayton “represented Och-Ziff Capital Management,” which is a hedge fund that got caught paying bribes, and an Italian oil company when it got caught paying bribes. He “helped secure a $365 million bribery settlement with the SEC on behalf of Italian oil giant Eni” and lists “Eni and subsidiaries in connection with an FCPA investigation by the SEC and DOJ” as representative of his work for marketing purposes.

Clayton “represented Och-Ziff Capital Management in its $1.2 billion initial public offering a decade ago, and subsequent offerings and financing. A unit of the New York-based hedge fund pleaded guilty for what federal prosecutors said were more than $100 million in bribes paid to officials in African countries.” [Leslie Picker, “Donald Trump Nominates Wall Street Lawyer to Head S.E.C.,” New York Times, January 8, 2017.]

In 2016 Och-Ziff Capital Management “agreed to pay a $213 million criminal penalty and enter into multiple criminal resolutions with the Department of Justice to resolve charges related to widespread bribery of officials in Libya and the Democratic Republic of Congo.” A subsidiary of the company “pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act.” [U.S. Department of Justice, “Och-Ziff Capital Management Admits To Role In Africa Bribery Conspiracies And Agrees To Pay $213 Million Criminal Fine,” Press Release, September 29, 2016.]

In the end “the hedge fund was forced to pay a $400 million settlement. Government authorities said…they were still investigating individuals related to [the] case.” [Leslie Picker, “Donald Trump Nominates Wall Street Lawyer to Head S.E.C.,” New York Times, January 8, 2017.]

In 2010, Clayton “helped secure a $365 million bribery settlement with the SEC on behalf of Italian oil giant Eni.” The company settled charges in the “bribery scheme that included deliveries of cash-filled briefcases and vehicles to Nigerian government officials to win construction contracts.” [U.S. Securities and Exchange Commission, “SEC Charges Italian Company and Dutch Subsidiary in Scheme Bribing Nigerian Officials With Carloads of Cash,” Press Release, July 7, 2010; and Matt Egan, “Jay Clayton, Wall Street lawyer, is Trump pick to lead SEC,” CNN Money, January 4, 2017.]

Eni and a subsidiary were part of a “decade-long Nigerian bribery scheme conducted by a joint venture of companies” that authorized the “hiring of two agents, a U.K. solicitor and a Japanese trading company, through which more than $180 million in bribes were funneled to Nigerian government officials to obtain several contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria.” They agreed to “jointly pay $125 million to settle the SEC’s charges,” and the subsidiary agreed to “pay an additional $240 million penalty to settle separate criminal proceedings by the U.S. Department of Justice.” [“SEC charges Italian company in scheme bribing Nigerian officials with carloads of cash,” CPI Financial, July 22, 2010.]

Clayton lists “Eni and subsidiaries in connection with an FCPA investigation by the SEC and DOJ” as representative of his work for marketing purposes. [“Lawyers, Jay Clayton,” sullcrom.com, accessed March 4, 2017.]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” for a client who was the founder and CEO of “the biggest handler of subprime mortgages in the United States.” This company was caught using “abusive servicing practices” and was fined $2 million in 2016 by the SEC. The founder and CEO was forced out of the company in a settlement with the New York Department of Financial Services.

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client William Erbey, who founded and was the CEO of Ocwen Financial. Ocwen Financial was “the biggest handler of subprime mortgages in the United States.” It has settled “with multiple government regulators in different jurisdictions – mostly due to allegedly abusive servicing practices.” In 2014 Ocwen Financial “paid a $100 million civil monetary penalty to the New York Department of Financial Services for its non-compliance on a prior consent order with the regulator. As part of the DFS settlement, Erbey was ousted from Ocwen.” In 2016 “Ocwen settled with the Securities and Exchange Commission for misstating its financial results during 2013 and 2014, paying a $2 million fine for having poor internal controls and failing to disclose former chairman and CEO Erbey’s conflicts of interest.” [Antoine Gara, “Ocwen Financial Discloses New SEC Investigation Weeks After Settling Accounting Charge,” Forbes, March 1, 2016; and Jay Clayton, OGE Form, March 2017.]

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from a hedge fund manager that has been involved in insider trading and fined by the SEC for pay-to-play violations.

Clayton reported receiving “compensation exceeding $5,000 in a year” for duties described as “legal services” from Sullivan & Cromwell client Pershing Square, which is a hedge fund manager. [Jay Clayton, OGE Form, March 2017]

Pershing Square was ordered to pay a “civil money penalty in the amount of $75,000” to the SEC over pay-to-play activity involving a public pension plan in Massachusetts. [“SEC Order,” In the Matter of Pershing Square Capital Management LP, January 17, 2017.]

The SEC, in 2014, “announced charges against two” Pershing Square employees “for insider trading” prior to Pershing Square’s announcement that its “hedge fund had formed a negative view of Herbalife Ltd. and taken a $1 billion short position in its securities. The SEC’s orders find that Filip Szymik of New York City and Jordan Peixoto of Toronto engaged in insider trading in Herbalife securities in advance of hedge fund manager William Ackman’s December 20, 2012 announcement of the views of his hedge fund, Pershing Square Management, L.P.” [U.S. Securities and Exchange Commission, “SEC Charges Two with Insider Trading on Pershing Square’s Announcement on Herbalife,” Press Release, September 30, 2014.]

Ally Financial was investigated for “bank-related foreclosure abuses…following the robo-signing debacle of fall 2010.” Clayton represented “Ally Financial in its part of the massive $25 billion settlement with the Department of Justice, the Department of Housing and Urban Development and state attorneys general over robo-signing.” He lists his role in this case as representative of his work for marketing purposes.

Ally Financial was investigated for “bank-related foreclosure abuses…following the robo-signing debacle of fall 2010.” Clayton represented “Ally Financial in its part of the massive $25 billion settlement with the Department of Justice, the Department of Housing and Urban Development and state attorneys general over robo-signing.” In this case, Ally Financial, Bank of America, Wells Fargo, JPMorgan Chase, and Citigroup came to an agreement with “49 state attorneys general, the Justice Department and the Department of Housing and Urban Development” to settle “a wide-range of foreclosure abuses from improperly prepared affidavits to allegedly forged notarization signatures and botched modification attempts.” This is “the largest joint federal-state settlement ever.” [Morgan Brennan, “How The $25 Billion Foreclosure Settlement Will Really Affect The Housing Market,” Forbes, February 9, 2012; Ben Lane, “Trump taps top Wall Street lawyer, Jay Clayton, to chair SEC,” Housing Wire, January 4, 2017; and Jon Prior, “Judge signs $25 billion foreclosure settlement,” Housing Wire, April 5, 2012.]

Clayton lists “Ally Financial in connection with the $25 billion mortgage origination and servicing settlement with the DOJ, HUD and state attorneys general” as representative of his work for marketing purposes. [“Lawyers, Jay Clayton,” sullcrom.com, accessed March 4, 2017.]

Clayton considers “Sarbanes-Oxley and Dodd-Frank…[to be] faulty and lacking focus.”

Clayton considers “Sarbanes-Oxley and Dodd-Frank…[to be] faulty and lacking focus. ‘If you look at Dodd-Frank, there was a systemic problem. There was a bubble in the financial industry, a bubble in the housing industry,’ said Clayton, partner at law firm Sullivan & Cromwell. ‘Most of the remedy there has been to focus on financial institutions, capital and liquidity, not some of the other causes of the systemic issue.’” [Roger Yu, “Honed by Wall Street: What makes Trump SEC chair pick Jay Clayton tick,” USA Today, January, 5, 2017.]

Clayton is not “a fan of regulations that would impose cybersecurity mandates on individual firms.”

Clayton “made clear that he wasn’t a fan of regulations that would impose cybersecurity mandates on individual firms.” [Roger Yu, “Honed by Wall Street: What makes Trump SEC chair pick Jay Clayton tick,” USA Today, January, 5, 2017.]

Clayton, if appointed SEC chairman, will have to recuse himself “for one year from voting on any particular matter if a firm or individual is being represented by Sullivan & Cromwell” and “be recused for a year from working on matters that involve clients he represented in the past year.” He will also have to be “recused indefinitely if a deal he previously worked on comes up during SEC litigation.” Based on Sullivan & Cromwell’s “recent” clients, Clayton would have to recuse himself for at least one year from matters involving nearly one-third of the institutions on the Financial Stability Board’s list of global systemically important banks.

If confirmed as SEC Chairman, Clayton “will be recused for one year from voting on any particular matter if a firm or individual is being represented by Sullivan & Cromwell.” Additionally, Clayton would “be recused for a year from working on matters that involve clients he represented in the past year, and recused indefinitely if a deal he previously worked on comes up during SEC litigation.” Furthermore, “the length of time could be longer if Trump opts to continue President Barack Obama’s current policy, which extended the recusal period by an additional year.” [Sarah N. Lynch, “Trump’s SEC pick Clayton points to capital formation, not enforcement,” Reuters, January 5, 2017.]

According to Sullivan & Cromwell LLP, the Washington, DC, office has “recent” experience representing Citi, JPMorgan, Deutsche Bank, Barclays, Goldman Sachs, Bank of Tokyo-Mitsubishi UFJ, Wells Fargo, Morgan Stanley, and UBS. [“Washington, D.C. – Selected Representations,” sullcrom.com, accessed March 4, 2017.]

Each of these banks appear on the Financial Stability Board’s 2016 list of “global systemically important banks,” representing nearly 33 percent of the institutions on the entire list. [Financial Stability Board, “2016 list of global systemically important banks (G-SIBs),” November 21, 2016.]

This list was created “as a consequence” of the 2008 financial crisis in order to determine which financial institutions would have to adopt “additional measures…to reduce the likelihood and severity of problems that” could emanate from the failure of a global systemically important financial institution. [Bank of International Settlements, “Global systemically important banks: Assessment methodology and the additional loss absorbency requirement,” July 2011.]


Biography

Walter Joseph “Jay” Clayton III “received a B.S. in engineering from the University of Pennsylvania in 1988 and a B.A. in economics from the University of Cambridge in 1990. He received his J.D. from the University of Pennsylvania School of Law in 1993.” Clayton joined Sullivan & Cromwell LLC “after graduating from…Law School in 1993.” He is “currently a partner with Sullivan & Cromwell LLP,” where he “has advised various multinational companies and their boards in connection with corporate investigations and regulatory matters involving the…SEC, the Department of Justice and the Federal Reserve Bank of New York.”

Clayton is “an avid golfer” and “a member of several exclusive clubs including Philadelphia Cricket Club and the Baltusrol Golf Club in Springfield, N.J.” [Donald J. Trump Presidential Transition Team, “President-Elect Donald J. Trump Nominates Jay Clayton Chairman of the SEC,” January 4, 2017; Dave Michaels and Liz Hoffman, “SEC Pick Jay Clayton Is a 180 From Chairman Mary Jo White,” Wall Street Journal, January 4, 2017; and Who’s Who Legal, “Most Highly Regarded Firms: Capital Markets 2012,” August 2012.]

Clayton currently lives “with his wife and three children” in Manhattan’s Tribeca neighborhood. His wife is employed by Goldman Sachs. [Julie Segal, “Trump’s SEC Chair Pick Sets Stage for Regulation Rollback,” Institutional Investor, January 6, 2017; and Sarah N. Lynch, “Trump’s SEC pick Clayton points to capital formation, not enforcement,” Reuters, January 5, 2017.]

They purchased an apartment in Manhattan, for $3.2 million in August 2006, and a house in Philadelphia, PA, in January 2008, for $1.3 million. [NYC Department of Finance Office of the City Registrar, “Document ID 2006081600008001” accessed March 4, 2017; and City of Philadelphia, “Property,” accessed March 4, 2017.]

Clayton has contributed more than $40,000 to federal candidates, including $1,000 to Bush-Cheney ‘04, $1,000 to Obama for America in 2007, $3,000 to Romney for President from 2010 to 2012, and $1,000 to Friends of Chuck Schumer in 2016. [CQ Political MoneyLine search for Walter Clayton, accessed March 22, 2017.]

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