Former SEC Chair Jay Clayton on US Regulator’s New Enforcement Ethos: ‘I Think That’s Problematic’

Jay Clayton, former chair of the U.S. Securities and Exchange Commission (SEC), has revealed his stance on the recently implemented enforcement strategy of U.S. regulators. In an interview on CNBC, Clayton stated that the SEC’s strategy of bringing myriad cases to court against U.S. corporations was problematic “at a 30,000-foot level.”

Jay Clayton Criticizes SEC’s Case Volume Strategy

Jay Clayton, former chair of the U.S. Securities and Exchange Commission (SEC), voiced his concerns with the new “ethos” of U.S. regulators, which involves bringing many cases to court, even those they think won’t succeed. In a recent interview on CNBC, Clayton referred to this enforcement strategy as a “fundamental shift” from how Americans view the role of the government.

About this new strategic approach, Clayton stated:

I don’t want to be in a place where I know the government is going to bring cases they think they are going to lose; imagine you are the person that is subject to that case.

Furthermore, Clayton declared that when agencies have the power of the state, they are “supposed to only bring cases and only make rules you think are going to pass judicial muster.”

U.S. Enforcement Strategy Is ‘Problematic’

Clayton also noted how state agencies believe that if they are not losing in courts, it can be perceived as if they have failed to fulfill their role as regulators, and how this can present problems for companies involved in these cases.

He explained:

What you are hearing from the leaders of the regulatory organizations is if we’re not losing cases, if we’re not being pushed back on by the courts we’re not doing enough … At a 30,000-foot level, I think that’s problematic.

Cameron Winklevoss, a co-founder of Gemini, a U.S.-based cryptocurrency exchange that is facing a lawsuit by the SEC “for the unregistered offer and sale of securities to retail investors through the Gemini Earn crypto asset lending program,” brought Clayton’s statements to the crypto space, stating:

Former SEC Chairman Jay Clayton describes the new and deeply un-American ethos of the SEC under Gary Gensler — if we’re not losing cases, we aren’t suing enough businesses. This is a total abuse of power.

Previously, Clayton has criticized how some enforcement actions are carried out by the SEC, stating these matters should be approached with more “nuance.”

What do you think about Jay Clayton’s views of the SEC’s enforcement ethos against companies? Tell us in the comment section below.