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Source: Securities and Exchange Commission

Dec. 28, 2020

Jay Clayton ended his tenure as Chairman of the Securities and Exchange Commission last week. I greatly enjoyed working with Chairman Clayton over the past three years. Under his leadership, the agency has navigated difficult and novel challenges, including the pandemic and associated shutdowns and market volatility. Chairman Clayton’s steady hand, wisdom, and optimism inspired the rest of us at the agency to remain focused and committed to protecting American investors and the U.S. capital markets. I particularly appreciated Chairman Clayton’s habit of setting an agenda publicly, following it, and recognizing the staff whose hard work made it all possible.

Chairman Clayton’s agenda was ambitious. He came to the agency with a goal of modernizing the disclosure framework for public companies so that more companies would go public earlier and therefore allow retail investors to share in their growth. He also looked for ways to enable retail shareholders to participate in the private markets on the same terms as professional investors. The Chairman’s commitment to protecting retail investors was reflected in all of the work he led, including the Commission’s active compliance and enforcement programs and the adoption of Regulation Best Interest, which strengthened the duties owed by broker-dealers to their retail customers. I had the privilege of working with Chairman Clayton in standing up the new regulatory regime for security-based swap dealers, a Dodd-Frank mandate the completion of which was long overdue. Despite our occasional differing views, his willingness to engage in discussions and to listen to my perspective was always appreciated and was instrumental, for example, in the crypto custody guidance that was released last week.

Chairman Clayton’s departure is only one of the big losses the Commission is experiencing during this time of transition. A number of the staff who worked so hard to make the Chairman’s tenure a success are leaving the Commission soon or have left recently. Director of the Division of Corporation Finance, Bill Hinman’s many years of experience counseling companies enabled him to provide us sage advice about how appropriately to modernize the regulatory framework and tailor it for companies at different stages of their lifecycle. His “When Howey Met Gary (Plastic)” speech not only gave me title-envy, but was a thought-provoking contribution to the digital asset regulatory discussion. Director of the Division of Trading and Markets Brett Redfearn’s many years of market experience and tireless zeal for market structure were an excellent complement to the Division’s deep legal knowledge and regulatory expertise as we drafted lengthy new rules and navigated through volatile markets. Dalia Blass, Director of the Division of Investment Management, tackled numerous substantive, complex rulemakings, many of which were long overdue, with great efficiency, enthusiasm, and expertise and an around-the-clock willingness to engage in spirited debate. Although never persuaded to adopt my approach to penny stock bars or corporate penalties, Stephanie Avakian ran the Division of Enforcement with a keen eye for talent, a willingness to work through difficult issues, and an understanding of the importance of bringing cases efficiently and as quickly as possible. Her erstwhile co-director, Steve Peikin, left over the summer and took with him a great sense of humor and a degree of candor, which always fostered productive discussions of difficult issues. It also has been an honor to work with S.P. Kothari, the Commission’s Chief Economist and head of the Division of Economic and Risk Analysis. His understanding of how different markets work and connect with one another is combined with a rare ability to explain these things to non-economists using Shakespeare references and other non-mathematical metaphors. I had the pleasure of observing first-hand the adeptness, agility, patience, and grace with which Raquel Fox, Director of the Office of International Affairs, navigated a whole host of cross-border issues, including important questions related to substituted compliance for our security-based swap regime. I also will miss the practical wisdom of General Counsel, Bob Stebbins, whose team I called on often for advice about rulemakings, enforcement actions, and more. The Chairman’s Chief of Staff, Sean Memon, managed the whole agency while managing to respond to my calls, questions, and concerns as if they were the only items on his agenda for the day.

The Chairman and these other senior leaders are leaving the agency in very good hands. I look forward to working with Acting Chairman Roisman, the Acting Directors, and other committed staff as the Commission continues its important work of protecting investors, facilitating capital formation, and fostering market integrity.

MIL OSI USA News