Trump's Chosen Wall Street "Sheriff," Jay Clayton: Whose Side Will His Regulatory Scalpel Target?

Original Article Title: "Trump's Wall Street 'Sheriff,' Jay Clayton: Which Way Will His Regulatory Scalpel Cut?"

Original Article Authors: Ava Benny-Morrison, Sridhar Natarajan, Bloomberg

Original Article Translation: Luffy, Foresight News

His professional background is nothing short of legendary: a top law firm partner, a Washington regulator, and a Wall Street dealmaker.

It was Jay Clayton who stepped in when the Leon Black and Jeffrey Epstein entanglement triggered a seismic event at Apollo Global Management. The seasoned lawyer successfully quelled internal strife, rebuilt trust, and steered the trillion-dollar asset management behemoth back on course.

Now, he is set to replay all this drama at another power hub in New York.

Clayton is poised to take on one of the most coveted positions in the U.S. legal world — the Chief Prosecutor of the Southern District of New York, becoming Wall Street's "de facto sheriff." As President Trump vows to wield the Justice Department against his perceived enemies, the 58-year-old Clayton is gearing up to take over this institution that has always staunchly defended its independence.

"We were facing a reputation crisis at that time, and Jay joined despite personal risks, bringing an incredible stabilizing force," said Apollo CEO Marc Rowan in an interview. Rowan predicts that Clayton will excel in his new role once again, saying, "Whether you are a Republican, Democrat, or Independent, you will like Jay Clayton."

Clayton previously 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 discussions with allies, acquaintances, and potential new members, Clayton has conveyed to the Southern District of New York Prosecutor's Office (SDNY) a message of staying the course: he can maintain the office's integrity and address Washington's pressures by aligning with Trump's policy priorities.

"His pro-America stance aligns with the President's expectations," said Rowan, who just a few months ago was on the list of government officials.

However, Trump's unorthodox intervention in this office known as the "Sovereign District" has made Clayton's task more complex. Senior officials in the Trump administration pressured the office to drop charges against New York City Mayor Eric Adams, a demand that led to a series of prosecutors resigning, exacerbating concerns that the office would become a White House political tool and a weapon to attack Trump's enemies.

This game carries huge risks. From 1980s junk bond king Michael Milken to cryptocurrency prodigy Sam Bankman-Fried, and even the mysterious billionaire Bill Hwang, all of them have been pursued by the office Clayton is set to inherit. Trump later pardoned Milken.

This article is based on conversations with over 30 sources who chose not to be identified, describing interactions with Clayton and other prosecutors in the Southern District of New York. Clayton declined to comment.

His primary challenge is to free the office from Trump's intervention. Just weeks ago, the office refused to handle the Adams case as the president wished, prompting Justice Department leaders to dig up messages in an attempt to portray the well-respected prosecutor as a political opportunist.

Trump pressured the Southern District of New York prosecutor to drop charges against Mayor Adams (center), Source: Bloomberg

Clayton stated that during his tenure leading the SEC in Trump's first term, he successfully avoided friction and undue interference, even though the agency had clashed with cryptocurrency entrepreneurs and Elon Musk (both of whom later became Trump supporters). However, his new role may be more perilous.

"I have never seen Trump take any interest in or intervene in the SEC; he might have thought it was the NFL," said former hedge fund manager and New York City mayoral candidate Whitney Tilson. "On the other hand, he wants the Justice Department to be a tool for his agenda and be thoroughly politicized. If Clayton doesn't cooperate, he will be fired."

While awaiting Senate confirmation, Clayton has been in discussions with judges and former heads of the Southern District of New York prosecutors (including Damian Williams and Preet Bharara). Bharara was famously fired during Trump's first term.

Unlike the radical ways that reshaped other U.S. institutions, Clayton is planning a prosecution agenda that aligns with government priorities.

One can imagine that this office may particularly focus on human trafficking, anti-Semitic hate crimes, and university protest activities. Recently, when federal agents arrested a Palestinian activist at Columbia University and attempted to revoke his green card, this issue came to the forefront. The office may also align with the Washington Department of Justice to play a broader role in enforcing Trump's tough immigration stance. This could unsettle the long-standing autonomy of the New York Southern District prosecutors.

The move to deport a Palestinian activist sparked a courtroom protest. Source: Bloomberg

It is widely expected that Clayton will continue to pursue white-collar crimes such as money laundering but not necessarily as aggressively as in the Biden era. He has publicly opposed the U.S. investigation into Wall Street's use of WhatsApp, criticized the excessive scrutiny of short sellers in private, and questioned regulatory agencies' lack of market sensitivity in reviewing large trades.

He is enthusiastic about taking action against non-U.S. companies involved in scandals, such as those that plagued China's Luckin Coffee and Germany's Wirecard. This caters to the dissatisfaction of Trump and the American business community, who believe that strict scrutiny only on U.S. companies will give their international competitors an advantage.

"Jay takes a pragmatic approach when prosecuting and does not get bogged down in minor issues," said Goldman Sachs President John Waldron. "His influence will extend beyond the Southern District of New York."

During his tenure as Chairman of the U.S. Securities and Exchange Commission, Clayton touted himself as a '401(k) champion,' and now he also hopes to closely monitor whether celebrity meme stock traders are harming the interests of ordinary retail investors.

This may disappoint those who prefer the hardline regulatory approach to Wall Street during the Biden era.

Although Clayton is not seen as a core member of the Trump camp, he has maintained a close relationship with Trump and they are golfing buddies. This lawyer is highly respected in New York's social circles. While not as bombastic as many regulars on Fox News, he will articulate Trump's views on television.

This mild-mannered image contrasts sharply with some other leaders in the Department of Justice. FBI Director Kash Patel once likened investigators into the President to "criminal thugs." Attorney General Pam Bondi publicly vowed to "clean house" of Justice Department staff who dislike Trump. This month, after she accused the FBI's New York office of concealing Epstein documents, the office's top official was forced to resign. A few days later, two senior New York Southern District prosecutors in charge of the Adams case were also reassigned.

Attorney General (Acting) vows to 'clean house' of Trump-disliking staffers at the Justice Department. Source: Bloomberg

This disdainful attitude toward career civil servants is at odds with the image Clayton cultivated. During his tenure as Chairman of the U.S. Securities and Exchange Commission, his 'call me Jay' mantra helped relax staff. He was a member of the agency's softball team. He hosted happy hours on the agency's tenth-floor terrace with beer and wine. This stood in stark contrast to the MAGA hardliners' advocacy for clearing out the 'deep state' management philosophy.

'He wasn't well known at the time, but quickly won over the staff,' said Steve Peikin, who helped lead the SEC's enforcement division, 'I took some controversial issues to him, and only once was it a politically sensitive issue, he told us to be tougher, not gentler.'

Under Clayton's leadership, the SEC worked with the Southern District of New York U.S. Attorney's Office to bring insider trading charges against the first sitting U.S. congressman to endorse Trump, New York Republican Chris Collins. One former Justice Department senior official said Trump was furious about this. Trump later pardoned Collins.

His career trajectory is roughly as follows: raised in Hershey, Pennsylvania, educated at the University of Pennsylvania, and quickly rose in the New York legal world. During the 2008 financial crisis, he sought life-saving investments for the failing Lehman Brothers, participated in JPMorgan's emergency rescue of Bear Stearns, and helped Goldman Sachs raise $5 billion from Warren Buffett.

In 2020, while playing golf, Trump asked Clayton what position he would like to hold in the next administration. The SEC Chairman expressed interest in becoming the U.S. Attorney for the Southern District of New York.

However, Trump attempted to replace the then-U.S. Attorney Geoffrey Berman with Clayton, a clumsy trial balloon that sparked a political firestorm, derailing Clayton's chances. So Clayton returned to the white-shoe law firm Sullivan & Cromwell, leveraging his corporate connections to work, eventually becoming a mediator for Apollo.

Former Apollo CEO Leon Black. Source: Bloomberg

After the revelation that Apollo's CEO Leon Black paid $158 million to Epstein for various financial services, investor confidence in the company was shaken. Co-founder Josh Harris seized the opportunity to attempt a takeover, further exacerbating the turmoil. In a settlement, co-founder Rowan became the CEO, and Clayton was appointed Chairman.

During the four years working with Rowan, Clayton helped restructure the board and drive the company's expansion. The company's stock price doubled. "Clayton has played a crucial role in guiding the company's transformation," said Apollo board member and former Pennsylvania Senator Pat Toomey.

Before Clayton even took office at the Southern District of New York prosecutor's office, Trump had already started exerting his influence on the office.

The new administration appointed Danielle Sassoon—a prosecutor with an outstanding conservative background—to temporarily lead the office before Clayton received Senate confirmation. However, she quickly faced pressure to withdraw a high-profile prosecution against Mayor Adams. She chose to resign, and other prosecutors also resigned, including Special Forces veteran Hagan Scotten, who was affectionately called "Captain America" by his colleagues.

In his resignation letter, Scotten mentioned that the Department of Justice would eventually find "someone foolish enough or cowardly enough" to drop the charges. Acting Deputy Attorney General Emil Bove eventually had to personally intervene to complete the dismissal. Clayton had predicted to confidants that after the June mayoral primary in New York City, the Adams case would no longer be an issue. Adams himself denied any wrongdoing.

Excerpt from Scotten's Resignation Letter

"Jay will be beneficial for the Southern District of New York prosecutor's office, especially during this tumultuous period," said former Manhattan federal prosecutor Nicole Friedlander. "He won't barge in like a bull in a china shop and meddle in other people's work."

There are other sources of turmoil in the office. Government officials warned that assistant U.S. attorneys on probation could be fired, and other prosecutors were told they might need to go to the U.S. border to handle immigration cases. At least one prosecutor involved in the Southern District's case against Ross Ulbricht received threats after Trump pardoned the Silk Road founder, calling the prosecutors in his case "scum" and "nuts." Defense lawyers lobbied the Deputy Attorney General's office to intervene and attacked other cases in the Southern District.

「What is deeply unsettling is that norms continue to be eroded," former New York Governor Eliot Spitzer said, "This is just the 83rd example."

During a speech at a conference last year, Trump saw attendees holding up a sign that read "Free Ross." Source: AFP

A common criticism of Clayton is that he lacks prosecutorial experience, which is typically a prerequisite for the role.

Bob Stebbins, who worked with him at the SEC, said that this criticism is unfounded. He compared Clayton's experience to his brief stint as captain of the basketball team at Cambridge University, a part of his resume Clayton himself has called "the least credible part."

"He wasn't a great shooter, not tall," Stebbins said, "but he was a great leader."

Matthew Podolsky, the current head of the New York Southern District Attorney's Office, has had four different titles since his election. He was a former editor of the Harvard Lampoon known for handling high-stakes Wall Street cases and now leads a beleaguered office.

Just this month, prosecutors from the Southern District of New York gathered at a city winery in Chelsea, enjoying mini-burgers and drinks from an open bar, discussing the turmoil in an office that was once seen as launching many bright careers. Despite the festive atmosphere, attendees expressed deep-seated concerns.

According to attendees' recollections, the host of the event, Bharara, said the events had "broken my heart." He also joked about Podolsky, saying he had set the record for "longest-tenured (in weeks) Southern District of New York prosecutor."

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