The eight-hundred-pound gorilla in the room was quickly addressed when the Chair of the Securities and Exchange Commission (SEC), came in front of Congress.
Jay Clayton is the SEC Chair, but last week, President Trump nominated him to be the US Attorney for the Southern District of New York.
That is a high-profile position which was previously held by James Comey, Rudy Giuliani, and Mary Jo White, herself previously also an SEC Chair.
As that nomination works its way through the Senate, Clayton remains the SEC Chair. In that role, he was the sole witness for the House Financial Services Committee hearing entitled, “Capital Markets and Emergency Lending in the COVID-19 Era.”
The hearing was referred to as a “hybrid hearing”, with some participating through teleconference and others inside the Congressional hearings.
Those inside the hearings were required to wear masks and keep a distance due to COVID 19 restrictions.
The hearing was held in front of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets which is chaired by Brad Sherman, a Democrat from the State of California.
In his opening remarks, Sherman addressed Clayton’s recent nomination.
“It has been suggested that as part of the President’s decision to fire the US Attorney for the Southern District of New York, that you would be called upon to fill that position.” Sherman said. “I rarely quote Senators because they are rarely a source of wisdom, but in this case, Chuck Schumer stated ‘Jay Clayton can allow himself to be used in this brazen Trump/Barr scheme to interfere with investigations of the US Attorney for the Southern District of New York or he can stand up withdraw his name for consideration and save his reputation.’”
Schumer is a Democratic Senator from the State of New York.
The whole affair turned into a spectacle when the previous head of the US Attorney’s Office for the Southern District of New York, Geoffrey Berman, refused to resign so William Barr, the US Attorney General and Berman’s then boss, publicly terminated him in a letter which was released. Barr announced Clayton’s nomination at the same time.
Clayton, during his opening remarks, addressed the controversy.
“I have a long, healthy respect for work in the Southern District, which is recognized throughout our nation, and internationally, for enforcing the law and pursuing justice without fear or favor. My deep personal respect is largely result of many years working with the Southern District and its distinguished alumni, including senior personnel at the SEC.” Clayton stated. “I recognize that the nomination process is multi-faceted and uncertain. It is clear that the process does not require my current attention. In short, I’m fully committed to and focused on my role at the SEC.”
At the hearing, Clayton also made some news, not related to the nomination. In his opening written statement, he noted that the SEC has halted trading in over thirty companies which were alleged to have committed fraud in relation to COVID.
“In many instances, after the Commission suspends trading in a security, Enforcement will continue to investigate whether an issuer whose stock has been suspended from trading or related bad actors were engaged in potential fraud or other misconduct,” Clayton noted in his written remarks, “and the Commission has brought a number of enforcement actions against issuers and individuals alleging fraud based on COVID-19 related claims. Some of these COVID-related investment schemes have been part of alleged market manipulations seeking to dump the companies’ stock into the market for purchase by unsuspecting investors.”
Clayton also wrote in his opening written remarks that his budget request for the SEC for the 2021 Budget will be $1.895 billion—a 4.4 percent increase over FY 2020 enacted levels.
The 2021 budget process is about to begin. A request is just that and it will ultimately be up to Congress and the President to agree to a final budget for the SEC, and the federal government, and the final number is subject to change.