By Sarah N. Lynch
WASHINGTON, March 7 (Reuters) - Wall Street dealmaking attorney Jay Clayton will appear before the U.S. Senate Banking Committee on March 23 for his confirmation hearing to become the next chairman of the Securities and Exchange Commission.
Clayton, an attorney at Sullivan & Cromwell who has worked on notable deals including the initial public offering of Alibaba Group Holding Ltd, is widely expected by SEC watchers to win Senate confirmation by a comfortable margin.
Nevertheless, Clayton is likely to face grilling by some of the more liberal-leaning Democrats on the panel, which include Elizabeth Warren and Sherrod Brown, the senior Democrat on the panel. Both have historically expressed skepticism about having people with close ties to Wall Street run the SEC.
The left-leaning Center for American Progress has drafted a 12-page guide laying out what it believes should be the main questions that lawmakers pose to Clayton.
Among the group's main concerns are whether Clayton will be tough on enforcement, maintain the SEC's regulatory independence and be willing to resist pressure from companies, including big banks, that are seeking special treatment.
Companies that break criminal laws or commit civil fraud are generally prohibited from certain activities, such as private capital-raising, unless the SEC grants them an exemption.
Progressives, including the SEC's Democratic Commissioner Kara Stein, have previously questioned whether the SEC too often rubber stamps these waiver requests, especially for repeat offenders.
In addition, a number of other progressive groups including Allied Progress and Public Citizen launched a campaign on Monday designed to spark grassroots opposition to Clayton by pointing out his prior work as a "bailout attorney for Goldman Sachs" who is "married to a Goldman partner."
Despite these complaints, Clayton is expected to be able to manage any conflicts he may have. His wife, Gretchen Butler Clayton, for instance, intends to resign from her post at Goldman as a private wealth adviser if her husband is confirmed, Reuters previously reported.
Moreover, many current and former SEC staff have privately told Reuters they are feeling upbeat about Clayton's nomination and confident he has the right skill set.
Clayton is likely to make capital formation a focal point of his tenure at the SEC, and he previously communicated to Trump's team some of his ideas for how to ease regulations that may be stifling the market for initial public offerings.
The topic has come up multiple times during Clayton's meetings with Republican members of the Senate Banking Committee, and Trump has also repeatedly pledged to scale back rules.
"The best way to deliver on the president's promise to energize the economy is to pick a deal lawyer who knows how to raise capital," said J.W. Verret, a professor at the George Mason University Antonin Scalia Law School.
Any effort by Clayton to scale back or repeal rules surrounding how securities are sold to the public may be met with opposition by the political left.
Former SEC Chair Mary Jo White, who also represented Wall Street clients while in private practice, frequently faced opposition for her stances on rules and the SEC's enforcement track record, prompting Warren at one point to call on White to resign. (Reporting by Sarah N. Lynch; Editing by Leslie Adler)