Trump SEC Pick: Another Nominee with Russian Ties Who Must Disclose ALL Potential Conflicts

Group Calls on Senate Banking Committee to Compel Jay Clayton to Release List of All Current and Former Clients, Domestic and International, Before His Confirmation Hearing


WASHINGTON, D.C. – In advance of the March 23 confirmation hearing of Jay Clayton, President Trump’s nominee to lead the U.S. Securities and Exchange Commission (SEC), Allied Progress wrote the Senate Banking Committee today encouraging members to demand “he release a comprehensive list of all current and former clients, both domestic and international” so that the American people can be “made fully aware” of his many “potential conflicts of interest.”

The letter goes on to note that Mr. Clayton’s selection is “an extension of the Trump administration’s troubling pattern of nominating individuals with Russian ties” since his law firm “has advised numerous entities including a company doing business with a Russian oligarch considered to be the nation’s wealthiest man, and the Russian government,” as well as “Deutsche Bank on a consent order related to the bank’s role in a $10 billion ‘Russian money laundering scheme.’” (The same bank has loaned more than $3 billion to The Trump Organization since the 1990s.)

Before the Senate Banking Committee considers Jay Clayton’s confirmation, they should require him to publicly release a list of all current and former clients, both domestic and international–including Russia. If he wants to be Wall Street’s top cop, we deserve to know all of his potential conflicts of interest, and how exactly he plans to function as chair of the SEC if he is required to recuse himself from such a significant portion of its important work,” said Karl Frisch, executive director of Allied Progress.

He continued, “The SEC is charged with protecting hard-working Americans from being taken advantage of by Wall Street. It oversees an enormous share of our economy, which amounts to nearly two-thirds of the net worth of all Americans. Needless to say, it matters a great deal who leads this important agency.

That’s why Mr. Clayton’s background as Wall Street’s go-to lawyer is so deeply concerning. He has assisted numerous multinational companies, including Goldman Sachs, in their efforts to fight corporate investigations and stop enforcement actions involving regulators like the SEC–the very agency he hopes to lead. Through it all, he has shown little regard for the negative impact his clients have on individual investors or the American economy,” he concluded.

On Monday, Allied Progress joined Our Revolution, CWA’s Take on Wall Street, Center for Popular Democracy, and Public Citizen in announcing a coordinated effort to oppose Clayton’s nomination, citing his massive and unavoidable conflicts of interest and cozy relationship with Wall Street that raise grave doubts about his commitment to protecting investors. The groups also launched ResistTheHostileTakeover.org and began organizing grassroots activities to demonstrate their opposition to Clayton’s nomination.

To speak with Karl Frisch about the Clayton nomination or this letter, please contact Rachel Palermo at 202-464-6951 or rpalermo@skdknick.com.

The Letter (Download PDF Here):

March 9, 2017

The Honorable Michael Crapo, Chairman
The Honorable Sherrod Brown, Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, D.C. 20510

RE: Compelling Trump SEC Nominee Jay Clayton to Reveal Clients

Dear Chairman Crapo and Ranking Member Brown,

Before the March 23 confirmation hearing of Jay Clayton, President Trump’s nominee to lead the U.S. Securities and Exchange Commission (SEC), the Committee on Banking, Housing, and Urban Affairs must demand he release a comprehensive list of all current and former clients, both domestic and international. The American people must be made fully aware of any potential conflicts of interest that may arise if he is confirmed, and the extent to which he will be forced to recuse himself from the important work of the SEC.

If confirmed, Mr. Clayton–a partner at Sullivan & Cromwell LLP–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 Mr. Clayton will need to recuse himself from cases involving upwards of one-third of the institutions on the Financial Stability Board’s list of “global systematically important banks.” But, that number could be much larger as there is no way of determining the identities of all of Mr. Clayton’s clients and the scope of his representation of those clients, without full disclosure by him.

What we know thus far about the scope of his representation of past clients should already concern the members of your Committee. 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, Mr. 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, Mr. 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 a company doing business with a Russian oligarch considered to be the nation’s wealthiest man, and the Russian government, on financial and oil and gas projects in the former Soviet Republic. 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.”

To fully ascertain the extent of Mr. Clayton’s potential conflicts of interest, the Committee on Banking, Housing, and Urban Affairs must require him to make public a complete list of all current and former clients, both domestic and international. He also should clearly identify which clients he represented and which he did not. Only then should the Committee continue with his scheduled confirmation hearing.

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 should not be threatened by an individual who is incapable of performing the basic duties of the job because he has too many conflicts of interest to do so.

Sincerely,

Karl Frisch
Executive Director
Allied Progress

CC:

The Honorable Bob Corker, Committee on Banking, Housing, and Urban Affairs
The Honorable Catherine Cortez Masto, Committee on Banking, Housing, and Urban Affairs
The Honorable Tom Cotton, Committee on Banking, Housing, and Urban Affairs
The Honorable Joe Donnelly, Committee on Bank­ing, Housing, and Urban Affairs
The Honorable Heidi Heitkamp, Committee on Banking, Housing, and Urban Affairs
The Honorable Dean Heller, Committee on Banking, Housing, and Urban Affairs
The Honorable John Kennedy, Committee on Banking, Housing, and Urban Affairs
The Honorable Robert Menendez, Committee on Banking, Housing, and Urban Affairs
The Honorable David Perdue, Committee on Banking, Housing, and Urban Affairs
The Honorable Jack Reed, Committee on Banking, Housing, and Urban Affairs
The Honorable Mike Rounds, Committee on Banking, Housing, and Urban Affairs
The Honorable Ben Sasse, Committee on Banking, Housing, and Urban Affairs
The Honorable Brian Schatz, Committee on Banking, Housing, and Urban Affairs
The Honorable Tim Scott, Committee on Banking, Housing, and Urban Affairs
The Honorable Richard C. Shelby, Committee on Banking, Housing, and Urban Affairs
The Honorable Jon Tester, Committee on Banking, Housing, and Urban Affairs
The Honorable Thom Tillis, Committee on Banking, Housing, and Urban Affairs
The Honorable Patrick J. Toomey, Committee on Banking, Housing, and Urban Affairs
The Honorable Chris Van Hollen, Committee on Banking, Housing, and Urban Affairs
The Honorable Mark R. Warner, Committee on Banking, Housing, and Urban Affairs
The Honorable Elizabeth Warren, Committee on Banking, Housing, and Urban Affairs

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Allied Progress is a nationwide, progressive advocacy organization that uses hard-hitting research and creative campaigns to hold Wall Street and powerful special interests accountable. Since launching in 2015, the organization has led high-profile campaigns on several issues including reforming the payday lending industry and exposing the those working to cripple the Consumer Financial Protection Bureau (CFPB).

 

 

 

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