The Trump administration's pick to head the Securities and Exchange Commission, Wall Street lawyer Jay Clayton, is set to tell lawmakers Thursday that he sees "meaningful room for improvement" at the agency when it comes to bolstering the U.S. market for initial public offerings.
"In recent years, our markets have faced growing competition from abroad. U.S. - listed IPOs by non-U.S. companies have slowed dramatically," Clayton said in testimony prepared for his confirmation hearing scheduled for Thursday at the Senate Banking Committee. "Investment opportunities for Main Street investors are more limited. Here, I see meaningful room for improvement."
If confirmed on Capitol Hill, the nation's securities agency would be led by a seasoned M&A attorney with experience providing legal advice around a wide variety of blockbuster mergers, including critical deals that were struck during the 2008 financial crisis that helped alleviate a more extensive market meltdown.
However, Democrats on Capitol Hill have launched a concerted effort to block Clayton's nomination, arguing that he has "massive and unavoidable" conflicts of interest and is overly cozy with Wall Street. Democratic Sens. Elizabeth Warren, D-Mass., Jeff Merkley, D-Ore., and Bernie Sanders, I-Vt., held an event Wednesday afternoon to express their concerns with the nominee.
The confirmation hearing also comes as institutional investors are putting pressure on the SEC and stock exchanges to block IPOs that would follow in the footsteps of Snap's (SNAP) - Get Report recent blockbuster IPO and issuance of non-voting shares. Shareholders argue that the issuance makes the company behind the Snapchat app unaccountable to investors and that as the nation's investor protection agency the SEC should make sure other companies don't list shares with non-voting shares. Backers of Snap argue that the non-voting structure is necessary to encourage IPOs and protect companies from activist investors.
It's unclear what Clayton thinks about the Snap structure, or a recent trend of tech company IPOs giving founders and insiders a controlling share of the votes. However, he certainly understands the topic. Clayton was a key adviser on Alibaba's (BABA) - Get Report much-maligned (at least in governance circles) New York Stock Exchange IPO in 2014. Seeking to attract IPOs from other jurisdictions, the NYSE accommodated Alibaba's demand that the e-commerce and media company's founders control a majority of the board.
Also, the vast majority of his biography and list of major deals he has advised on was recently deleted from a website of the lawfirm he worked for, Sullivan & Cromwell, raising speculation that Clayton is responding to pressure over his conflicts and wants to hide his accomplishments which now appear to be conflicts.