Senator jay walden to be recognized by President Trump to be the head of the securities and Exchange Commission. This is two hours and 25 minutes. The meeting will come to order. This morning we will hear testimony of jay clayton be the head of the securities and Exchange Commission. He has extensive experience in the markets as a highly decorated securities trader. He has helped to inkrecrease th ability of those to invest in the united states. One area na mr. Clayton has said that he will focus on is market formation. The access is the lifeblood of the economy. The jobs act helped to revitalize the primary markets in congress and the s. E. C. Should continue to find ways to help companies to go public to allow the investors the share in their success. Recently, this committee marked up several bipartisan securities bills, and we encourage you, mr. Clayton, if confirmed to help others identify securities area, which could use legislative improvement. The s. E. C. Has a important threepart mission, and maintain fair and orderly markets and facilitate Capital Formation. Each part of the mission is equally important, and should not come at the expense of another. I raise it, because the s. E. C. s mission is critical to every u. S. Citizen and retiree. And investors should participate in the markets on fair foot sog they can pay for the lifes events such as college and save for retirement. We also need to help investors have ip informed material to make inle forred investment decision. I have repeatedly stressed for the u. S. Financial system and its markets to remain the preferred destination for investors throughout the world, and the s. E. C. Has an Important Role to that end. I look forward to hearing more from you on how we can help companies grow, and americans get hired an investors share in the Wealth Creation by these companies. Another important issue is that the s. E. C. Is tasked with ensures that stock market rules and regulations are s appropri given that most of them were promulgated in a time when technology was less advanced. It is important that we serve the needs of the investors, and for the s. E. C. To do retrospect tiff reviews of their own regulations to make sure they are working out as intended and still acceptable. This is in line with the president s own executive orders on regulation. And other reg yu ulators are sut to Economic Growth and regulatory paper reduction act which statutorily demands a review of existing regulations to identify which are outdated, unnecessary or unduly burdensome. And the while, technically, the s. E. C. Is not subject to egripa the predecessor came before the committee and said that she is committed to reviewing the s. E. C. s rules in that fashion, a and a commitment like that is one that many would like to see continue. Additionally, it is important for the s. E. C. To have robust cost benefit analysis, and i have stated this position, and restated the cost benefit analysis in an executive order, and i look forward to hearing from you in these issues as well as what you hope to prioritize at the s. E. C. Congratulations on the nomination, and thank you you and your family for the willingness to serve. I turn it over now to senator brown. Thank you, mr. Chairman. And congratulation, mr. Clayton, on your nomination to be the chair of the securities and Exchange Commission, and i appreciate your willingness to enter Public Service, and we all know the demands it places on you and your beautiful family, and thank you for willing to stand up here. And in the past nomination hearings, even though the technology has changed how the markets work and for example, how do we improve oinvestor protection, and have better Financial Statements, and bring real accountability for misconduct. Candidate trump certainly understood that the American People are tired of the continual news misbehavior on wall street with far too often no consequences or accountability. A year ago candidate trump went to the site of the stand up for the little guy speech in iowa given by and also the home of radar which if you are not over 50, you will not know. And so, he said that he knew the people on wall street, and he would not let them get away with murder. That is candidate trump. The people in the audience would be surprised that he picked the alumni of Goldman Sachs to occupy the top two jobs at treasur treasury, and turned to Goldman Sachs to run the agency, and as he knew, the sacrifice to pay for College Bills and down payment on the homes, they are less trusting of the market and whether it is another flash crash, a billion dollar ponzi scheme, people are not trusting the market with their hard earned savings, and that is what you are working and walking into. We will be debating whether retirement advisers should put their clients interests first, and we bait here whether retirement advisers should put their clients interests first, and it is not hard to see why people feel that way. And in recent years, we have witnessed the Financial Risks of hacking and cyber crime, and Climate Change, and it seems that the list of concerns is growing longer, and the insistence for remove progtections against fraud and abuse grows louder and more sweeping as, as amnesia, and collective amnesia is swept across this body. I hope that we dont spend the next two hours talking about issues that you agree are important only to be ignored if you are confirmed. You have spent your career protecting some of the biggest names in wall street, and the relationships pose a host of conflicts for the position. I am concerned that you may need to recuse yourself too often at a time when we need a strong and independent s. E. C. Chair on the front light of enforcement and not watching from the sidelines. Your record representing banks, and bankers and hedge fund, and executives speaks for itself, but they are well represented among the president s friend, and supporters and advisers and far too many people in all three branches of government. I want to hear today what you will be doing to represent glass workers in lancaster, ohio, and Steel Workers in canton, ohio, and inm oso cases a private equity or hedge fund took control of their company and hastily shipped the jobs over seas. The people with jobs scrape by as the incomes are stagnant and the benefits and the paychecks have grown smaller over the years, because the management is more worried about pleasing wall street, and padding their profits raer thr than care about working people. Meanwhile, executive pay is up, and up, and up, and the workers working near retirement have had the pensions and Health Care Benefits slashed. And that is the disclosure of the corporate disclosure spending, and the fiduciary spending, and the corruption efforts of the Mining Industries, and i could go on and on and on and the special interest influence in this body and the administration, and that is why all of those rules are important. There is a lot of ground to cover. If i dont get through all of my questions here, and i know that the colleagues will do the same, submit them separately for the record. Mr. Chairman, thank you, and mr. Clayton, thank you again for your willingness to serve. Thank you very much, senator brown. And mr. Clayton will you now rise and raise your right hand. Do you swear or affirm that the testimony that you are about to give is the truth, the whole truth and knot obeinothing but so help you god . Thank you. And the one more question, do you agree to appear and testify before any duly constituted committee of the senate . Thank you. You may take your seat. Your written statement is a part of the record in its entirety and again, i give you my congratulations on the nomination, and before you begin your statement to the committee, you may, if you choose introduce the members of your family. I see that you have a beautiful family here with you. Great. I will do that. Thank you, senator. I will start here at this end, and my father Walter Clayton and my mother Catherine Clayton and my wife gretchen and my daughterers haley and jasper, and my son wyatt, and my youngest brother andrew and hi wife michelle are all here for me today. Thank you, and you are fortunate to have a beautiful family and have them with you here today. And mr. Clayton, you may proceed. Thank you very much, senator. Chairman, crapo and ranking members of the committee, im honored to appear before you today as President Trumps nominee to chair the securities and Exchange Commission. I want to thank you and the staff for the time that you have spent with me. I have enjoyed and learned from our meetings. Our Capital Markets have far reaching and profound effects for every american, and make shoog ur that the markets are fair, open, orderly and efficient, and making sure that the investors are protected is the fundamental responsibility of the s. E. C. If confirmed, i will take up this responsibility with energy and purpose. I pledge to work with my fellow commissioners, and the s. E. C. Staff, and this committee and the many others who support, and defend our Capital Markets. And the importance of Government Service was instilled in me from a young age, and six weeks after i was born, my father shipped out to vietnam as a Second Lieutenant and my mother 20 at the time and i moved to her childhood home in likens, pennsylvania. We lived with her parents and four younger brothers. And the lucky for me, my grandfather, pat kerwin, the eighth and last child of coal miners and Public Servant in title and action took a interest in. These experiences much more maine street than wall street made a deep and lasting impression on me. When i entered the ninth grade we moved as a family for the last time to delaware county, pennsylvania. I met new friends mostly through sports. One of those friends who has long been my best friend is my wife gretchen. We met 26 years ago and have been married 25 years. I want to specifically thank gretchen for her encouragement, love and support. As chair of the scc, i will be mindful of my responsibility to my children and their generation. During the course of my 20 plus career as a transactional lawyer its been my privilege to work with leaders in the public and private sector including a landmark transactions such as the Worlds Largest ipo as well as important transaction during the dark financial crisis. When i worked in new york on the laws and markets in new fewer than a dozen countries, france, sweden, switzerland, greece and germany i learned that the worlds Capital Markets are very interconnected and more broadly that america is indeed the greatest country. My work involves counseling a small number of businesses and individuals, my father and mother operated a small logistics business. There were ups and downs and i learned firsthand the machine challenges that small and medium sized businesses faced as well as their importance to the economy. Based on all my experiences nationally and internationally on wall street and maine street i firmly believe that well functioning Capital Markets are important to every american, two, all americans should have the opportunity to participate in and benefit from our Capital Markets on a fair basis, including being provided Accurate Information about what they are buying when they invest and three theres zero room for im committed to weeding out shady fraud, i recognize they under mine the hard earned confidence essential to our Capital Markets. I plenl to you and to the American People that i will show no favoritism to anyone. One last comment. Over 70 years the u. S. Capital markets have been the envy of the world. Our markets have allowed our businesses to grow and create jobs, provided a broad Cross Section of america to grow. Including Pension Funds and retirement assets, in recent years our markets have faced growing competition from abroad. U. S. Listings by non have slowed dramatically and clear that our public Capital Markets are less attractive to markets than in the past. As a result Investment Opportunities for maine Street Investors are more limited. Here i see meaningful room for improvement. I am excited to work with you, my fellow commissioners and the scc staff to pursue those improve. S and in doing so i will always be vigilant to ensure that the commission is steadfast in protecting investors. Thank you for this opportunity. I look forward to sooereceivingr advice. Thank you. I would like to remind the members of the committee we will be work onging on a five minute timeframe and encourage that so all colleagues can get their questioning in and as senators are prone to do you may get a question at the end of the five minutes, if that happens i will allow you to answer but encourage you to be brief in those answers. First, you are highly regarded, some raised concern that your success and former clientds will create conflicts for you and frankly, would you quickly provide us your thoughts on this issue . Yes, snarenator. I will try to be brief. I have been fortunate to have a diverse experience as a transactional lawyer and securities lawyer dealing with a number of participants both nationally and internationally in a number of different settings, securities offerings, mergers, acquisitions and regulatory matters et cetera, i believe the types i worked on which involved problem solving is a strength. As far as the extent of my practice, and whether the recusals that would be required in the potential conflicts will impair my ability to act as chair in Security Exchange commission, i do not believe they will, i have discussed this at length with the office of government ethics, this is not a new issue, theres a protocol in place for dealing with those matters. Most importantly i believe if i am recused that my fellow commissioners will be able to handle the matters ably and to good effect. Thank you very much. And i agree your observation, it seems a persons success in a field we are now asking them to lead in agency could be a criticism, so i appreciate your commitment the assure that conflicts will not arise and that you will fairly and impartially administer the agency. Mr. Clayton in your Opening Statement you discussed the derth to keep the Capital Markets robust serving as engines for the economy, can you let us know how the acc can aid in this particular process . Yes. I am looking at this from the outside. I very much look forward to discussing this with my fellow commissioners and the scc staff but i will note that easing the onramp to the public Capital Market process, when i say easing the onramp i dont mean easing the regulation that Important Companies face, making it less costly up front to become a Public Company has had an affect on the market. When i go to meetings where a company is considering whether to go public or not one of the first questions asked is this an emerging Growth Company because thats made it easy to become registered Public Companies in this country. Thank you. The equity markets have seen a lot of change in the past few decades including products listed as well as the Technology Behind it and the investors participating in it. Your predecessor as well as the current acting chairman and other commissioners stated theres a need to review the current equity Market Structure and such review should be disciplined and conducted a data driven manner. What are your thoughts of continuing this and what steps does the scc still need to do . Senator, i think it is very apparent that technology continues to change our markets. And that is something that will continue. The markets respond, tech knowled technology responds, we need to currently as far as the specifics of the Market Structure, analysis that the commission has going on now, i do believe that they should continue. I have become thanks to some of the questioning from you and your staff become more familiar with that and i do believe we should continue examining Market StructureGoing Forward. Thank you. I just let you know at the conclusion of my five minutes that this is a very important issue to us and we look forward to receiving the input from the scc from its analysis so i encourage you to pursue that very aggressively. Thank you. I will yield back 15 seconds out of my five minutes senator brown. I will take it. Thank you, mr. Chairman. Given this administrations unprecedented business in commercial ep tanglement entanglement and lack of transparency we must focus on conflicts of interest the case to have scc isnt hypothetical in 2002 President Trumps casino business enforcement action over the use of nongap financial data, before the case he sent a letter to the entire commission asking for leniency and then sent a letter to then chair harvey