Dive Brief:
- Jay Clayton, chairman of the Securities and Exchange Commission (SEC), is stepping down at the end of the year even though his term doesn't end until June 2021, the agency said.
- Clayton, appointed in 2017, made deregulation, IPOs and a whistleblower program priorities of his administration.
- "We have improved investor protections, promoted capital formation for small and larger businesses, and enabled our markets to function more transparently and efficiently," he said in a statement.
Dive Insight:
Clayton, an attorney who specialized in M&A deals and advising companies on IPOs and other capital raises, occasionally clashed with other SEC commissioners over his regulatory agenda.
As chairman, he supported easing rules and making other changes to boost IPOs, which, aside from a brief increase this year, have been in long-term decline. But some commissioners were concerned the changes would lead to poorer quality IPOs.
"If we stay on this [deregulation] path, we may well see a continued decline in both quantity and quality of public offerings, to the detriment of all investors," said Commissioner Allison Herren Lee.
Lee and another commissioner, Caroline Crenshaw, were also critical of an easing of firewalls between auditors and the companies they oversee.
"We cannot support introducing greater opportunity for error and uncertainty into auditor independence standards while decreasing visibility into how auditors are actually making these judgments," they said.
Clayton said the new auditor rules would improve protections by basing enforcement on how objective and impartial auditors are rather than on their relationships.
One area in which the SEC was forceful was on the use of the agency's whistleblower program. In the most recent reporting period, for fiscal year 2020, the agency awarded 39 whistleblowers $175 million, a 200% increase from 2019, with one whistleblower receiving $114 million, the most ever awarded.
Whistleblowers helped drive the agency's enforcement actions up. In fiscal 2020, the SEC brought 715 enforcement actions, resulting in 475 bars or suspensions, 130 delistings and a record $4.7 billion in judgments paid by violators.
The transition team of president-elect Joe Biden hasn't indicated who might be nominated to succeed Clayton. Two people who have been mentioned are Gary Gensler, head of the Commodity Futures Trading Commission under President Obama, and Ted Kaufman, who is heading up the transition team, according to a report in The Wall Street Journal.
