Jay Clayton is one of the best deal lawyers on Wall Street, which if you know anything about tracking down sophisticated crimes, makes him perfect to run the most high-profile law enforcement office in the country.
Trump on Wednesday named Clayton the “interim” US Attorney for the Southern District. The reason the Southern District is so important in uncovering financial crimes is because it spans Manhattan, the home of Wall Street, banks and real estate. As bank robber Willie Sutton once said “that’s where the money is.”
Clayton, 58, knows the money business very well. He was the chair of the Securities and Exchange Commission during Trump’s first term, when Wall Street’s top cop brought nearly 3,000 cases and focused the agency’s efforts to crack down on malfeasance that directly impacted small investors.
But it is his private sector deal experience, On The Money has learned, that really gives him an edge running a vast criminal law enforcement operation like the Southern District.
“He’s got a proven track record running one of the biggest federal government law enforcement agencies, being even-handed and thoughtful; and strategic,” said one long-time securities lawyer who also served in the government and has worked closely with Clayton. “Plus his private sector activities span all sorts of issues involving our capital markets that will be highly relevant at the Southern District.”
Clayton spent 28 years doing deals for banks, M&A, and underwritings; most significantly he’s an expert at due diligence on deal partners, determining not only if they had the money to pay for something, but that they didn’t rob the money in the first place. During the 2008 financial crisis he was a go-to lawyer for the banks, including Goldman Sachs when they were negotiating a cash infusion from Warren Buffett to stabilize the firm’s balance sheet.
Such due diligence is a little known part of M&A work, often overshadowed by the big news of major multinational corporations combining their vast operations to create some of the biggest companies in the world. But it’s vitally important to check where flows of capital come from, or if CEOs aren’t hiding nefarious dealings either in their business or private lives that could jeopardize the success of the combined companies.
Clayton needs to be confirmed by the Senate, which is narrowly controlled by the GOP, so his appointment should be made official at least along party lines. He received overwhelming bipartisan support when he was confirmed to run the SEC.
This time could be trickier given the noxious political environment, and some significant opposition is already mounting. A potentially big hurdle is NY Democrat Chuck Schumer, the Senate Minority Leader. It should be noted that Schumer voted against him for the SEC post, but was significantly outnumbered 61 to 37.
According to Senate custom, the senior US senator from the state of the appointed US attorney often has a large say in whether the candidate is approved, and some GOP senators still like the unofficial rule.
But if you know anything about Trump, he’s all about busting norms, and Clayton, if you look at his law enforcement record fairly, is hardly a wild-eyed MAGA partisan. When he was SEC chair, he brought a civil case against current MAGA darling and Tesla chief Elon Musk for allegedly falsely touting a buyout of his EV company. The securities fraud case led to a $20 million payment and Musk being barred as chairman for three years.
If and when Clayton is confirmed, On The Money has learned he will focus the office on safety issues, making sure violent criminals who fall afoul of federal laws are taken off the street. He will also look at human trafficking, which has a huge money component to its nefarious operations, as well as financial crimes, which the office has a particular expertise in uncovering.
Clayton declined to comment.
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