U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton may be the next U.S. Attorney for the Southern District of New York.
According to a Department of Justice press release published late Friday, Clayton was nominated by U.S. President Donald Trump to helm the prosecutor’s office, three years after he first took on the role as chairman of the nation’s top securities regulator. Clayton’s term as chairman was slated to expire in 2021.
While initially the press release said current SDNY U.S. Attorney Geoffrey Berman would be stepping down, he denied plans to resign in a statement late Friday. Trump fired him Saturday, according to a separate statement from U.S. Attorney General William Barr, although Trump himself apparently told reporters he was “not involved.” Ultimately, Berman said late Saturday he would be stepping down “effective immediately.”
“It has been the honor of a lifetime to serve as this District’s U.S. Attorney and a custodian of its proud legacy,” Berman said in his second statement.
In Friday’s DOJ statement, attributed to Barr, the department announced U.S. Attorney for New Jersey Craig Carpenito would also serve in the Southern District role on an interim basis starting July 3, until Clayton is confirmed by the U.S. Senate. Barr’s statement on Saturday changed this as well, announcing that Deputy U.S. Attorney Audrey Strauss would instead be filling in on the interim basis.
“I know that under her leadership this Office’s unparalleled [assistant U.S. attorneys], investigators, paralegals and staff will continue to safeguard the Southern District’s enduring tradition of integrity and independence,” Berman said in his statement Saturday.
According to Stephen Vladeck, law professor at the University of Texas School of Law, it was possible Berman could continue serving until Clayton is confirmed. Martin Lederman, a former Deputy Assistant Attorney General and current law professor at the Georgetown University Law Center, said on Twitter Trump can remove Berman but Barr cannot.
Preston Byrne, a partner and attorney with Anderson Kill, told CoinDesk the issue surrounding this question is whether the provisions addressing appointments and firings conflict. In his view, “they only conflict if appointees can’t be fired.”
Marc Goldich, co-managing partner of Axler Goldich LLC, told CoinDesk that “there’s a decent argument” Berman could have continued serving until Clayton is confirmed.
“Notwithstanding that (and notwithstanding arguments for prosecutorial independence), the President is of course granted executive authority which – at least customarily – includes the authority to fire U.S. Attorneys under Article II of the Constitution,” he said.
Line of succession
Barr’s statement did not indicate who might replace Clayton at the SEC’s helm. On Saturday, Clayton sent an email to staff saying he would continue working at the SEC until he is confirmed, according to Bloomberg. The confirmation process will give New York’s two senators, Democrats Chuck Schumer and Kirsten Gillibrand, a chance to weigh in on Clayton, according to NPR reporter Carrie Johnson.
“For the past three years, Jay has been an extraordinarily successful SEC Chairman, overseeing efforts to modernize regulation of the capital markets, protect Main Street investors, enhance American competitiveness, and address challenges ranging from cybersecurity issues to the COVID-19 pandemic,” Barr said in his statement.
As SEC chair, Clayton oversaw the regulator during the peak of the 2017 initial coin offering bubble and much of the aftermath. At various events, he has discussed the agency’s approach to the crypto space, including raising questions about the bitcoin market’s ability to be manipulated, size and custody solutions.
“Just speaking for myself, we have to get to a place that we can be confident that trading is better regulated,” he said last September about the crypto space.
SDNY has also been active in crypto regulation, bringing a number of cases against allegedly fraudulent crypto projects. Unlike his predecessors at SDNY, Clayton is not a prosecutor, said Politico reporter Zachary Warmbrodt.
Friday’s announcement comes on the heels of Trump announcing he would be renominating Commissioner Hester Peirce for another five-year term. The move leaves two seats vacant on the SEC, after Democrat Commissioner Robert Jackson Jr. resigned earlier this year. Trump has nominated SEC senior counsel Caroline Crenshaw to the post.
Commissioners Elad Roisman and Allison Herren Lee are the other two members of the SEC.
UPDATE (June 20, 2020, 22:15 UTC): This article has been updated extensively as new information became available.