(Yahoo! Finance) - President-elect Donald Trump’s choice of former SEC boss Jay Clayton to lead an office of prosecutors with a history of pursuing financial crimes is notable for its complete lack of controversy — especially on Wall Street.
The announcement that Clayton would serve as US Attorney for the Southern District of New York (SDNY) came amid a string of other Trump nominations that attracted considerably more attention for their breaking of norms, including Matt Gaetz as attorney general and Pete Hegseth as defense department secretary.
Clayton, on the other hand, is a "well-respected, known entity," said white-collar criminal defense attorney and former federal prosecutor Michael Weinstein.
After he ran the Securities and Exchange Commission from 2017 to 2020, Clayton returned to the New York white-shoe law firm Sullivan & Cromwell, where he currently advises on financial regulations and government investigations.
He also serves on the board of the giant private equity firm Apollo Global Management. (Disclosure: Yahoo Finance is owned by Apollo Global Management).
Clayton was "considered somewhat pro-Wall Street" during his time at the SEC and "had a good reputation coming out of that role," said former federal prosecutor William Devaney, chair of Baker McKenzie's North American litigation and government enforcement group.
Trump "didn’t put in his own political guy, at least," added Weinstein, who noted that Clayton’s experience at the SEC and as a litigation attorney should help streamline the financial cases that make up the bread and butter of SDNY’s work.
Not that Clayton doesn’t have some work to do if he gets confirmed by the US Senate to the post. He lacks criminal prosecution experience, which, to Weinstein, creates "a real blind spot" for the jurisdiction that will need to be overcome with help from experienced deputies.
And he is also not free from all political controversy surrounding moves made by Trump in the past.
He landed in the spotlight during Trump’s first term in office in the summer of 2020 when he was first floated for the SDNY post during a White House shake-up.
In June of that year, Trump’s US Attorney General Bill Barr wrote in a letter to Trump-appointed SDNY chief Geoffrey Berman that he wanted Berman to resign so that he could be replaced by Clayton. Berman refused, and Trump made a controversial move, firing him.
At the time, Berman had already prosecuted defendants with ties to Trump, including associates of Trump’s lawyer Rudy Giuliani, Lev Parnas, and Igor Fruman, who were convicted on campaign finance contribution violations.
Clayton told lawmakers in public testimony that summer that he was "fully committed" to his work at the SEC and ultimately didn’t take the position.
Past clash with Elon Musk
His political skills could be tested again if confirmed for the SDNY post. Trump, who was convicted of 34 felonies this year in a New York State Supreme Court case, has vowed retribution on those who prosecuted him. The case was prosecuted by Manhattan district attorney Alvin Bragg.
“The question will be how much autonomy he or any US Attorney will have in the Trump Justice Department,” said Baker McKenzie's Devaney.
Clayton would join an office that has for decades pursued cases involving Wall Street wrongdoing, organized crime, drug rings, political corruption, and terrorism.
Its most high-profile cases in recent years include the prosecution of FTX cryptocurrency exchange founder Sam Bankman-Fried, US Senator Bob Menendez, New York City Mayor Eric Adams, and hip-hop mogul Sean "Diddy" Combs.
During his time as SEC chair, Clayton initiated more than 2,800 enforcement actions and assessed $15 billion in financial remedies. The SEC returned $3.5 billion to harmed investors and paid more than $580 million in whistleblower rewards.
Just before leaving the SEC in December 2020, Clayton launched a first-of-its-kind lawsuit against enterprise software company Ripple, the company that created the digital currency XRP (XRP-USD).
In the case, the SEC alleged that the cryptocurrency had been illegally sold as an unregistered security. The commission later dropped the charges in favor of pursuing a remedy to address the SEC’s concerns.
Before Clayton left the SEC he also tangled with Tesla (TSLA) CEO Elon Musk, an adviser to Trump on the campaign trail who this month was tapped to curtail government spending in the new administration.
Musk and the SEC in 2018 agreed to a deal to resolve securities fraud charges against the billionaire after Musk posted to social media platform X that he had "funding secured" for a buyout of the electric-car company at $420 a share.
Musk stepped aside as chairman for three years and agreed to a $20 million fine.
Trump, in his announcement on Truth Social, called Clayton "a highly respected business leader, counsel and public servant."
By Alexis Keenan - Senior Legal Reporter
