Brown Statement at Committee Vote on SEC Nominee Clayton
WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – issued the following statement at today’s Executive Session on the nomination of Jay Clayton for Chairman of the Securities and Exchange Commission. Brown voted against Clayton’s nomination.
Brown’s remarks, as prepared for delivery, follow.
Senator Sherrod Brown - Opening Statement:
Executive Session
April 4, 2017
Two weeks ago this Committee heard from Jay Clayton, the President’s nominee to be Chair of the U.S. Securities and Exchange Commission.
Mr. Clayton is an experienced corporate lawyer, but his deep ties to Wall Street will leave him hopelessly conflicted in the SEC’s most high profile enforcement actions.
We know the SEC brings hundreds of enforcement cases each year – from violations at the biggest banks to the smallest Ponzi schemes – and there are real victims who suffer real consequences.
Most cases are straightforward and the Commission agrees on the penalties. And that’s important. But, too often, we have seen big Wall Street banks commit one violation after another. The American people should not have to trust that one of Wall Street’s own will be able to hold big banks accountable.
In an administration already rife with conflicts, Mr. Clayton in particular will face conflicts in cases involving the biggest banks on Wall Street, if not the world, that he used to represent. Those conflicts mean he will be on the sidelines, unable to vote on some of the SEC’s most important cases.
The numbers are staggering. The 17 biggest banks were involved in 122 SEC enforcement actions from 2005 through 2015. In that time, the SEC granted 248 waivers from disqualifications triggered by those enforcement actions. While no one wants a streak like that to continue, history says it probably will if the SEC is doing its job.
At the same time, the recusals will pile up for Mr. Clayton in the most complicated cases. It looks like the President was wrong when he said that he would not “let Wall Street get away with murder.”
This Committee should be discussing ways to strengthen penalties and maximize their deterrent effect, not weaken them. In fact, Senator Reed has introduced a bi-partisan bill to enhance civil penalties under the securities laws. Mr. Chairman, it is bills like that one and others that I hope we can consider this Congress.
In addition, in his confirmation hearing, Mr. Clayton told us he knows about the SEC’s investor protection mandate, but he failed to describe, even in the most basic ways, what the SEC can do make sure investors get a fair shake. Instead, he said he believes it is acceptable to have a market where companies can impose governance structures that upend shareholder rights as long as they are disclosed.
That is a disappointing answer from the person nominated to head the agency responsible for investor protection. We saw what happened when watchdogs let the market decide what was best, and it was a disaster for millions of American families.
Over 20 years at a Wall Street law firm makes you think a certain way. And that way usually doesn’t involve focusing on families saving for retirement.
As I said at his hearing, it’s not the first time we’ve seen a nominee like Mr. Clayton. I was concerned about Mary Jo White’s conflicts and corporate law background. She was conflicted in dozens of high-profile cases, and then a month after stepping down as Chair, she returned to her old law firm. As a lawyer might say – that’s bad precedent.
What American investors and markets need is a responsible, fully engaged SEC Chair who will understand what is important to Main Street investors and companies, and not just focus on what Wall Street needs and wants.
The SEC needs to be led by an independent Chair. With Mr. Clayton’s conflicts, and his failure to understand the concerns and risks faced by American savers, I am unable to support his nomination.
As I said about my vote on Mr. Clayton’s predecessor, I hope that he proves me wrong.
Thank you, Mr. Chairman.
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