Removal of US Attorney Puts Low-Profile Markets Regulator In Unwanted Spotlight

© Reuters. Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, speaks at the Economic Club of New York luncheon in New York City

By Chris Prentice and Katanga Johnson

WASHINGTON (Reuters) – The surprise decision on Friday by the U.S. Department of Justice to replace a top federal prosecutor has put one of the Trump administration’s most low-key bipartisan officials in the limelight, surprising people who do it. they know and have worked with him.

Over the past day, the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, has come under enormous pressure to reject his nomination to replace the federal prosecutor in Manhattan Geoffrey Berman, who was fired by the president Donald Trump on Saturday after refusing to resign on Friday night. statement.

In his post in the Southern District of New York (SDNY), Berman had led the prosecution of high-profile corruption and Wall Street crimes, and had been investigating Trump’s personal attorney, Rudolph Giuliani. Giuliani has not been formally charged with any crime.

Clayton could not be reached for comment Saturday. His spokesman did not respond to requests for comment.

“Clayton can allow himself to be used in Trump-Barr’s blatant plan to interfere with the SDNY federal prosecutor’s investigations, or he can tackle this corruption, withdraw his name from consideration, and save his own reputation from the ruin of the overnight. ” “Senate Top Democrat Chuck Schumer tweeted on Saturday.

Lindsey Graham (NYSE :), chairman of the Republican-controlled Senate Judiciary Committee, said that she had not been consulted about Clayton’s nomination and that she still planned to seek approval from New York Senators Schumer and fellow Democrat Kirsten Gillibrand, as usual practice. .

That announcement left Clayton’s nomination for the role of SDNY in serious doubt. However, the episode has surprised current and former SEC officials and attorneys who have worked with Clayton, a former independent political and corporate attorney who has thus far steered well away from partisan controversy.

It also raises questions about the SEC’s future leadership, which could fall to rank Republican Commissioner Hester Peirce, an ultra-conservative who frequently votes against penalizing companies for wrongdoing. Peirce did not immediately respond to a request for comment Saturday night.

Berman himself had been considered for the post of SEC chairman before his explosive statement Friday night, according to a public letter Barr sent to Berman on Friday.

“Given the controversy, I think he (Clayton) will step down,” said JW Verret, a securities law professor at George Mason University, who said he knows Clayton from his work on the SEC’s Investor Advisory Committee. He described Clayton as “personable” and said he has “played straight through the middle” at the SEC.

While Clayton has been criticized by Democrats and consumer advocates for pushing the Trump administration’s agenda to cut red tape, he is generally respected for his expertise and described by those who treat him as considerate and personable.

“It’s not clear to me that he’s the right person for the SDNY job if the goal is to comply with the president’s orders against his own judgment,” said Scott Bauguess, a University of Texas professor and former SEC official. .

A member of the SEC’s enforcement division staff said that within the agency, where Clayton is well-liked, people were “stunned” that he had been involved in what appeared to be a political firing. “I see that as a betrayal of what he stood for during his three years at the SEC,” this person said.

He also questioned whether Clayton, who has no criminal record and can only pursue civil cases at the SEC, had the qualifications for the position.

An hour after Berman issued a statement Friday saying he would not resign, Clayton sent a note to all SEC staff saying it was “a great honor to be considered for this important position.” He added that he remained “fully committed” to the work of the SEC pending its confirmation, according to the email seen by Reuters.

Three people with knowledge of Clayton’s thinking said he had been seeking a high-level government job that would allow him to be in New York, where he worked full-time before joining the Washington-based SEC position.

But two of those sources and other attorneys questioned whether he would now want a role that had caused such a political storm. Verret speculated that Clayton may not have had all the facts when he agreed to be nominated.

“I really think Clayton is going to do the right thing here,” he added.

(Writing and additional reporting by Michelle Price; Additional reporting by Lawrence Delevingne; Editing by Marguerita Choy and Sandra Maler)