Former Sullivan & Cromwell partner Jay Clayton was confirmed by the Senate to become the 32d Chairman of the Securities and Exchange Commission with a bipartisan 61 to 37 vote, overcoming the objections of liberal Democrats such as Senator Bob Menendez, who criticized Clayton for refusing to comment on the Dodd-Frank pay ratio mandate. "It is a tremendous honor to lead the SEC" said Chairman Clayton. "The work of the SEC is fundamental to growing the economy,creating jobs, and providing investors and entrepreneurs with a share of the American Dream. I would like to thank Acting Chairman Piwowar for his leadership, and I look forward to working with my fellow Commissioners and the talented SEC staff to ensure that our markets remain the safest and most vibrant markets in the world."
The SEC is governed by five presidentially-appointed commissioners, three from the President's party. Since the beginning of 2016, however, the SEC has been virtually paralyzed, unable to engage in rulemakings without three commissioners to form a quorum. While there are now three commissioners, no major rulemakings are expected in the near term. Democrat Commissioner Kara Stein is expected to not attend meetings on issues with which she disagrees, and thereby deny Chairman Clayton a quorum on those issues. Two more commissioners will need to be in place before items such as the Dodd-Frank pay ratio regulation can be addressed. However, according to The Wall Street Journal, Mr. Clayton has already selected several key members of the SEC staff, including the head of the Division of Corporation Finance, which oversees corporate disclosures such as executive compensation. Thus, the Commission will be able to engage in staff-level interpretations immediately, which could impact compliance on a range of issues, potentially including the pay ratio rules. To date, there have been only rumors of potential nominees for the two open commissioner slots, but with Chairman Clayton's confirmation, it is hoped that names will begin to surface in the near feature.