Jay Clayton, Wall Street lawyer, is Trump pick to lead SEC

Icahn: I'm against the stupidity of some regulations
Icahn: I'm against the stupidity of some regulations

President-elect Donald Trump's choice to be the next top cop of Wall Street is Jay Clayton, an elite lawyer who has defended big banks for their financial crisis-era misbehavior.

Clayton has extensive ties to Wall Street. He advised Goldman Sachs on its government bailout and his wife Gretchen currently works at the bank as a private wealth advisor.

Trump announced his SEC pick on Wednesday and explained that Clayton's background as a Wall Street lawyer will help unleash the "job-creating power" of the economy while still providing strong oversight.

"We need to undo many regulations which have stifled investment in American businesses, and restore oversight of the financial industry in a way that does not harm American workers," Trump said in a statement.

The appointment rankled some Democrats, particularly Senator Elizabeth Warren. She told CNNMoney in a statement that Trump's selection of Clayton is another sign that "his administration will put Wall Street first and working families last."

"Mr. Clayton's selection is great news if you happen to run a big bank or manage a hedge fund," Warren said, "but you're out of luck if you want to see tough rules on Wall Street and bankers held accountable when they break the law."

The SEC is responsible for rooting out financial crime such as fraud as well as ensuring capital markets are fair for all investors. "Robust accountability will be a hallmark of his tenure atop the SEC, and the financial security of the American people will be his top priority," the Trump statement said.

Clayton is currently a partner at the powerful law firm Sullivan & Cromwell and has advised on a slew of major deals, including the record-breaking Alibaba (BABA) IPO and the sale of the NBA's Atlanta Hawks.

His law firm bio also notes that Clayton helped secure mortgage settlements on behalf of large financial institutions with the government.

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It's not clear which specific banks Clayton defended. However, Sullivan & Cromwell's website said the firm represented Goldman Sachs, JPMorgan Chase, Barclays (BCS) and other banks against allegations that they fraudulently issued or underwrote hundreds of toxic mortgage deals prior to the subprime collapse. Sullivan & Cromwell similarly helped JPMorgan reach its $13 billion toxic mortgage settlement with the Department of Justice in 2013.

Clayton also has ties to Bear Stearns, the investment bank that collapsed during the financial crisis as its toxic loan portfolio spiraled out of control. He represented Bear in its fire sale to JPMorgan (JPM).

Additionally, Goldman Sachs (GS) hired Clayton to advise on the Wall Street firm's TARP bailout as well as the crucial $5 billion investment it received from Warren Buffett's Berkshire Hathaway (BRKA) during the crisis.

Clayton already has experience working with the SEC, albeit on the other side. In 2010, Clayton helped secure a $365 million bribery settlement with the SEC on behalf of Italian oil giant Eni (E).

If confirmed, Clayton said he wants the SEC to strike a balance between providing oversight and helping the economy.

"We will carefully monitor our financial sector, as we set policy that encourages American companies to do what they do best: create jobs," Clayton said.

Related: Scandal-ridden Wells Fargo wants less regulation

Clayton would replace Mary Jo White, who is stepping down on January 20 even though her term doesn't expire until June 2019. Some liberal critics, led by Senator Warren, have claimed White didn't do enough to prevent business from pouring cash into politics.

While White spent her tenure trying to implement a wave of rules coming from Dodd-Frank, Clayton could be charged with helping Trump carry out his pledge to "dismantle" the reform law.

Clayton beat out former federal prosecutor Debra Wong Yang for the SEC job. While Yang is a star corporate lawyer like Clayton, she earned a reputation for toughness as a prosecutor by taking down a violent drug-dealing gang and investigating financial fraud.

Democrats strongly criticized Trump's selection of Clayton. Senator Sherrod Brown, the ranking Democrat on the Senate Banking Committee, knocked Clayton as an "attorney who's spent his career helping Wall Street beat the rap."

Adam Green, co-founder of the Progressive Change Campaign Committee, compared Clayton's nomination to allowing the "fox guard the henhouse on Wall Street."

On the other hand, the Investment Adviser Association, which represents SEC-registered firms, praised Clayton as a "highly regarded, respected and accomplished" lawyer who has a "deep understanding" of complex transactions and regulations.

Jaret Seiberg, an analyst at Cowen & Co., called Trump's selection of Clayton a "conventional choice" for a Republican president given his background at a high-profile law firm.

"He almost is from central casting," Seiberg wrote in a note.

--CNNMoney's Cristina Alesci contributed to this report.

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