Wall Street "Sheriff" Jay Clayton is about to take office, why is he favored by Trump?

Author: Ava Benny-Morrison, Sridhar Natarajan, Bloomberg

Compiled by: Luffy, Foresight News

His career resume is legendary: a partner in the top law firm, a regulator in Washington, and a capital broker on Wall Street.

It was this Jay Clayton who was in danger when Leon Black and Jeffrey Epstein's entanglement triggered a high-rise earthquake in Apollo Global Management. The senior lawyer successfully quelled internal strife and rebuilded trust, bringing the trillion-dollar asset management giant back on track.

Now, he will repeat it all in another hub of power in New York.

Clayton is about to take up one of the hottest positions in the American legal community, the highest prosecutor in the Southern District of New York, becoming the "actual sheriff" of Wall Street. As President Trump vows to use the Justice Department to strike the enemy in his eyes, Clayton, 58, is preparing to take over the institution that has been firmly defending his independence.

"We were facing a reputation crisis at the time, but Jay took personal risks to join, and he had an incredible force of stability," said Apollo CEO Marc Rowan in an interview. Rowan predicts Clayton will be competent for a new position again, "Whether you are a Republican, Democrat or nonpartisan, you will love Jay Clayton."

 Clayton led the U.S. Securities and Exchange Commission (SEC) during Trump\'s first term and later became chairman of Apollo. Source: Getty Images

In private communication with allies, acquaintances and potential new members, Clayton’s message to the Southern District Attorney’s Office of New York (SDNY) is to keep the course: he can maintain the office intact and deal with the pressure from Washington by fitting Trump’s policy priorities.

"His pro-U.S. stance is consistent with the president's expectations," Rowan said, who was on the shortlist of government officials a few months ago.

However, Trump's unconventional intervention in the office known as the "sovereign jurisdiction" complicated Clayton's mission. Senior Trump officials have put pressure on the office to drop allegations against New York Mayor Eric Adams, a demand that has led to a series of prosecutors leaving office, heightening concerns that the office will become a political tool in the White House and a weapon against Trump’s enemy.

This game has huge risks. From junk bond king Michael Milken of the 1980s to cryptocurrency prodigy Sam Bankman-Fried, and even mysterious billionaire Bill Hwang, all of them are hunted down by the office that Clayton will inherit. Trump later pardoned Milken.

This article is based on conversations with more than 30 people who declined to be named, who described their exchanges with Clayton and other prosecutors in the Southern District of New York. Clayton declined to comment.

His first challenge is to lift the office out of Trump’s intervention. Just a few weeks ago, the office refused to handle the Adams case as the president wished, prompting Justice Department leaders to dig out news records in an attempt to portray the highly respected prosecutor as political speculators.

 Trump presses prosecutors in Southern New York to drop allegations against Mayor Adams (center), source: Bloomberg

Clayton said he successfully avoided friction and improper intervention while leading the SEC during Trump’s first term, despite the agency’s clash with cryptocurrency entrepreneurs and Elon Musk (who later became Trump supporters). However, his new role could be even more dangerous.

"I've never seen Trump have any interest or intervention in the SEC, and he might think that's the football league," said Whitney Tilson, a former hedge fund manager who runs for New York mayor. "On the other hand, he wants the Justice Department to be a tool of its agenda and to be completely politicized. If Clayton doesn't cooperate, he'll be fired."

While awaiting Senate confirmation, Clayton has been talking with the judge and former head of the Southern District of New York attorney, including Damian Williams and Preet Bharara. Bharara was fired during Trump's first term, and the matter is well known.

Unlike the radical ways to reshape other U.S. agencies, Clayton is planning a prosecution agenda that meets government priorities.

As you can imagine, the office may be particularly focused on human trafficking, anti-Semitic hate crimes and university protests. The issue surfaced recently when federal agents arrested a Palestinian activist at Columbia University and tried to revoke his green card. The office may also be in line with the Washington Department of Justice to play a broader role in implementing Trump’s tough immigration stance. This could upset the prosecutors of the Southern District of New York who have long maintained their autonomy.

 The deportation of a Palestinian activist sparked a court protest in the actions. Source: Bloomberg

It is generally expected that Clayton will continue to investigate white-collar crimes such as money laundering, but it may not be as active as the Biden era. He has publicly opposed the U.S. investigation into Wall Street’s use of WhatsApp, privately criticized the over-scrutiny of short sellers and questioned the lack of market sensitivity for regulators when reviewing bulk transactions.

He is keen to take action against non-U.S. companies involved in scandals, such as those that have plagued Luckin Coffee in China and Wirecard in Germany. This caters to the dissatisfaction of Trump and the American business community that rigorous scrutiny of American companies would give their international competitors an advantage.

"Jay will be pragmatic when prosecuting and will not be overly entangled on secondary issues," said John Waldron, president of Goldman Sachs. "His influence will surpass the Southern District of New York."

While serving as SEC, Clayton once claimed to be a "defender of the 401 (k) program" and now he also wants to keep a close eye on whether celebrity Meme stock traders are harming the interests of ordinary retail investors.

This may disappoint those who prefer the Biden-era approach to tough regulation on Wall Street.

Although Clayton is not seen as a core member of Trump’s camp, he maintains close ties with Trump, who are golfers. The lawyer is highly respected in the New York social circle. Although not as boasted as many Fox News regulars, he will refine Trump's views on TV.

This modest image contrasts sharply with some other Justice leaders. FBI Director Kash Patel has compared law enforcement officers investigating the president to "criminal thugs." Attorney General Pam Bondi openly vows to "clean" Justice Department employees who hate Trump. This month, she accused the FBI's New York office of concealing Epstein's documents, and the head of the office was forced to leave. A few days later, two senior New York Southern District Attorneys who were in charge of the Adams case were also transferred.

 Attorney General (Central) vows to \"clear\" Trump-hate employees in the Justice Department. Source: Bloomberg

This disdainful attitude towards professional civil servants is incompatible with the image created by Clayton. During his tenure as SEC, his “Call Me Jay” mantra made employees relax their guard. He was a member of the agency's softball team. He serves beer and wine on the terrace on the tenth floor of the institution, and holds a happy queue. This is completely different from the management philosophy of eliminating "deep government" advocated by MAGA hardliners.

"He wasn't well-known at the time, but he quickly won the favor of his employees," said Steve Peikin, who helped lead the SEC's law enforcement. "I went to him with some controversial issues, and only once involved politically sensitive issues, and he told us to be tougher, not gentler."

Under Clayton, the SEC teamed up with the New York Southern District Attorney’s Office to file insider trading charges against Chris Collins, the first member of Congress who supported Trump. A senior Justice Department official at the time said Trump was angry about it. Trump later pardoned Collins.

His career was roughly as follows: Growing up in Hershey Town, Pennsylvania, attended the University of Pennsylvania, and rapidly rose in the legal community in New York. During the 2008 financial crisis, he sought life-saving investments for Lehman Brothers, who was on the verge of bankruptcy, participated in JPMorgan's emergency rescue for Bear Stearns, and helped Goldman raise $5 billion from Warren Buffett.

When playing golf in 2020, Trump asked Clayton what position he hoped to hold in the next administration. The SEC chairman said he wanted to be an attorney for the Southern District of New York.

But Trump's attempt to replace then-U.S. Attorney Geoff Berman with Clayton, this clumsy temptation triggered a political upheaval and ruined Clayton's chances. So Clayton returned to Sullivan & Cromwell, a white shoe law firm, and used his corporate client connections to work, eventually becoming Apollo's mediator.

 Former Apollo CEO Leon Black. Source: Bloomberg

News that Apollo boss Leon Black paid Epstein $158 million for various financial services has shaken investors' confidence in the company after it was revealed. Co-founder Josh Harris seized the opportunity to try to seize power, further exacerbating the chaos. In a settlement, co-founder Rowan became CEO and Clayton was appointed chairman.

During four years with Rowan, Clayton helped reorganize the board and drive the company's expansion. The company's share price has tripled. "Clayton has made an indelible contribution to guiding the company's transformation," said Pat Toomey, a former Pennsylvania Senator.

Trump had already begun exerting his own influence on Clayton before he could take office in the office of the Southern District of New York.

The new administration appoints Danielle Sassoon — a prosecutor with excellent conservative qualifications — to temporarily lead the office before Clayton was confirmed by the Senate. But she was soon under pressure to be called to revoke a high-profile lawsuit against Mayor Adams. She chose to resign, and other prosecutors also left, including Hagan Scotten, a special forces veteran who was affectionately called "Captain America" ​​by her colleagues.

Scotten mentioned in his resignation letter that the Justice Department will eventually find someone "silly enough or cowardly enough" to withdraw the lawsuit. At that time, Acting Deputy Attorney General Emil Bove, finally had to take action in person to complete the withdrawal of the lawsuit. Clayton predicted to his cronies that the Adams case will no longer be a problem after the June New York mayoral primary. Adams himself denied any misconduct.

 Excerpt from Scotten\'s resignation letter

"Jay will be good for the New York Southern District Attorney's Office, especially during turbulent times," said former Manhattan federal prosecutor Nicole Friedlander. "He won't be stinging on other people's work like a bull who broke into a porcelain shop."

There are other turbulent factors in the office. Government officials warned that the assistant U.S. attorney on probation could be fired, and other prosecutors were told that they might need to go to the U.S. border to deal with immigration cases. At least one prosecutor involved in the case of Ross Ulbricht in the Southern District of New York received threats after Trump pardoned the founder of the Silk Road, whom Trump called the prosecutor "scum" and "crazy." Defense attorneys have lobbyed the deputy attorney general's office to intervene, attacking other cases in the Southern District of New York.

"What is deeply disturbing is that the norms are constantly eroding," said former New York Governor Eliot Spitzer. "This is just the 83rd example."

 When Trump delivered a speech at a conference last year, the audience held a slogan \"Release Ross.\" Source: AFP

A common criticism of Clayton is his lack of prosecution experience, which is often a prerequisite for holding the position.

Bob Stebbins, who worked with him at the Securities and Exchange Commission, said the criticism was groundless. He compared Clayton to his brief captainship at the University of Cambridge, whom he himself called the "most unreliable part" of his resume.

"He's not a great shooter, he's not tall," Stebbins said. "But he's a good leader."

Matthew Podolsky, the current director of the Attorney’s Office of the Southern District of New York, has changed four different titles since the election. He was formerly the editor of Harvard Sarcasm, known for handling high-stakes Wall Street cases and is now leading a scarred office.

Just this month, prosecutors from the Southern District of New York gathered at Chelsea’s city winery, eating mini burgers while drinking wine from open bars, discussing the turmoil in the office that many have regarded as opening a brilliant career. Although the event was cheerful, participants said that everyone was deeply worried.

According to attendees, event host Bharara said what happened "broken my heart". He also teased Podolsky, saying he set a record for the "longest serving time (in weeks)" of New York's Southern District Attorney.