Jay Clayton, former chair of the U.S.
Securities and Exchange Commission (SEC), has shared his perspective on the recent shift in enforcement strategy by U.S. regulators. Speaking in an interview on CNBC, Clayton expressed concerns about the SEC’s practice of initiating numerous cases against U.S. corporations, even those they anticipate may not succeed. He described this approach as “problematic” when viewed from a broad perspective.
Jay Clayton Disapproves of SEC’s High Volume of Cases Former SEC Chair Jay Clayton criticized the agency’s recent enforcement ethos, which involves aggressively pursuing a large number of cases, including those with uncertain outcomes. Clayton highlighted this strategic shift as a departure from traditional governmental roles in the eyes of Americans.
Regarding this new approach, Clayton remarked:
“I don’t believe it’s appropriate for the government to bring cases that they expect to lose; consider the impact on the individual or entity subjected to such litigation.”
Clayton emphasized that regulatory agencies should exercise their authority judiciously, only pursuing legal action and promulgating rules that they believe will withstand judicial scrutiny.
Challenges with the Current Enforcement Strategy Clayton also raised concerns about the prevailing mindset within regulatory bodies, where avoiding losses in court is seen as a metric of regulatory effectiveness. He warned that this mindset could pose challenges for companies embroiled in legal disputes with regulatory agencies.
He explained:
“The prevailing sentiment among regulatory leaders seems to suggest that unless we face setbacks in court, we are not sufficiently aggressive. From a broader perspective, I find this troubling.”
Cameron Winklevoss, co-founder of Gemini, a U.S.-based cryptocurrency exchange currently facing legal action from the SEC, echoed Clayton’s sentiments. He criticized the SEC’s approach under Gary Gensler, stating:
“Former SEC Chairman Jay Clayton has highlighted the disturbing shift in the SEC’s ethos under Gary Gensler – suggesting that suing businesses indiscriminately is a badge of honor. This represents an egregious abuse of power.”
Clayton has previously advocated for a more nuanced approach to enforcement actions, emphasizing the importance of considering the complexities of individual cases.
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