Jay Clayton, the Wall Street attorney tapped by President Donald Trump to lead the U.S. Securities and Exchange Commission, will face questions on his vision for the agency at his confirmation hearing on Thursday before the Senate Banking Committee.
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A partner at Sullivan & Cromwell who is not registered with any political party, Clayton has worked on high-profile initial public offerings like Alibaba Group Holding Inc and is widely expected to focus his efforts on ways the SEC can foster economic growth and help companies raise capital.
Clayton will pledge to be tough on fraudsters in his opening statement to the committee, according to his prepared remarks.
"Bad actors undermine the hard-earned confidence that is essential to the efficient operation of our capital markets," he plans to say.
The SEC enforces securities laws and regulates U.S. stock, options and bond markets.
Clayton is expected to win confirmation easily. But he can expect sharp questioning from Democrats such as Senator Elizabeth Warren of Massachusetts, who is expected to ask about his professional ties to Wall Street, particularly with Goldman Sachs, a bank he represented during the financial crisis and that employs his wife, Gretchen.
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Clayton's client list has included Barclays, Deutsche Bank and the Royal Bank of Canada, as well as Bill Ackman's hedge fund Pershing Square Capital Management, and William Erbey, former executive chairman of mortgage servicer Ocwen Financial Corp, who was forced to resign as part of a settlement stemming from an investigation into improper foreclosures.
Clayton will recuse himself from matters in which he has a financial interest, according to his disclosures with the Office of Government Ethics.
His wife is expected to resign her post at Goldman if he is confirmed by the full Senate.
Committee Republicans led by Chairman Mike Crapo of Idaho are likely to press Clayton for some of his ideas on how to engender capital formation, a goal the Trump administration has embraced.
Cindy Fornelli, executive director at the Center for Audit Quality, a nonprofit whose board includes corporate chief executives and audit firms, said she hoped Clayton would continue a project started by his predecessor, Mary Jo White, to streamline corporate disclosures.
"I would be surprised if he didn't," she told Reuters in an interview before the hearing. "He is a transactional lawyer and knows very well the complexities and arcane nature of our disclosure regime."
(Reporting by Sarah N. Lynch; Editing by Linda Stern and Peter Cooney)