By Soyoung Ho
Chairman Jay Clayton resigned from the SEC on December 23, 2020, ending a tenure that was praised by businesses but criticized by investor protection advocates.
Clayton’s departure was expected as he confirmed in November that he will be leaving the agency by the end of the year. His exit follows the presidential election in early November. Regardless of who wins, the head of the agency usually steps down shortly after the election.
During his tenure, Clayton pursued a largely deregulatory agenda under the Donald Trump administration, which is also winding down.
He has accelerated the pace of rulemaking, especially on items that cut back requirements for businesses despite strong opposition by investor protection advocates who fear that their investments will be put at greater risk.
For example, he rolled back the auditor attestation to management’s internal control over financial reporting. This was probably the number one goal on the U.S. Chamber of Commerce’s wish list for several years. The business group had argued that the requirement is costly for companies without providing much benefit to investors.
Coming into this year, despite the COVID-19 pandemic, Clayton hit the gas pedal hard, accelerating already-fast paced rulemaking activities. The SEC has adopted over 90 rules during Clayton’s tenure.
He wanted to get as much rulemaking done before he leaves because he would need to be the tie breaker on many of the controversial rules. Had he left earlier, the rules would not pass as the vote will be 2 to 2.
But President-elect Joseph Biden will soon name a new SEC chair, who is expected to follow a different agenda. The new chair is likely to focus on improving corporate disclosures for investors, especially information related to climate change risks.
In the meantime, President Trump is likely to appoint Hester Peirce as acting chair. And when Biden is inaugurated as president on January 20, 2021, he is likely to replace Peirce with Allison Herren Lee as the acting chair until a permanent chair is confirmed by the Senate.
In his last public statement as chairman, Clayton thanked the SEC’s 4,500 employees for their service.
“They have shown time and again how fortunate we are as a nation to have individuals of strong character and unwavering commitment serving at this great agency,” Clayton said. “Their importance and the impact of their efforts were on full display this past year, when, in the face of tremendous operational, personal and professional challenges, they came together and worked tirelessly to support the continued functioning of our markets.”
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