On Monday, November 16, 2020, SEC Chairman Jay Clayton announced his intention to depart from the agency by the end of 2020. News of Clayton’s decision comes as no surprise to most in the industry, as it is typical for the SEC Chair to hand the reigns to a successor around the time of an election for President. What many had speculated about, however, was the timing of Clayton’s eventual move.
The results of the November 3, 2020 election may have influenced Clayton’s decision to leave by year-end, rather than remain as Chairman into 2021 had the election results had been different. Rumors of Clayton’s impending departure have swirled since June 2020 when President Trump nominated Clayton to serve as the next U.S. Attorney for the Southern District of New York (SDNY). The SDNY role never materialized, but it fueled speculation that Clayton might leave before the election.
Clayton has served as SEC Chairman since May 2017. In that time, he has set one of the agency’s most aggressive and prolific (and perhaps most contentious) rulemaking agendas in recent history. Clayton’s announcement was accompanied by a lengthy list of selected accomplishments covering rulemaking, regulatory guidance and relief, enforcement, investor protection, and even internal agency and industry considerations like diversity and inclusion. The accomplishments include adopting Regulation Best Interest and Form CRS, tackling several “market structure” issues in the trading and markets space, adopting many long-overdue rulemakings mandated by Title VII of Dodd-Frank, and adopting several rulemakings aimed at capital formation, including “harmonizing” exempt offerings, a change to the definition of “accredited investor,” and increased offering limits for Regulation A, Regulation Crowdfunding, and Rule 504 offerings. All of this took place despite several, significant developments that risked derailing Clayton’s agenda, not the least of which were the crypto/ICO wave of 2017/2018, the 6-week federal government shutdown of late 2018/early 2019, and the COVID-19 pandemic the world has been battling for most of 2020.
It is likely that President Trump will appoint one of the two remaining Republican Commissioners (Peirce or Roisman) as acting Chair. In January, when many expect former Vice President Biden to be sworn in as President, it is likely that Democratic Commissioner Lee will be appointed as acting Chair, followed by an eventual, newly appointed Chair to lead the agency for the foreseeable future.
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