President-elect Joe Biden has reportedly settled on Janet Yellen to lead the Treasury Department, but for now it’s unclear who he will choose for another top finance post: That of Securities and Exchange Commission Chairperson.
The SEC plays a critical role in overseeing U.S. capital markets and protecting investors, and the head of the agency plays a key role in shaping its priorities. President Trump’s pick for the position, Jay Clayton, announced this month he will step down at the end of the year, six months before the formal end of his term.
As for Clayton’s replacement, media reports have floated the names of Gary Gensler, a former Chair of the Commodity Futures Trading Commission who is helping Biden’s team with the transition, and Preet Bharara, the former U.S. Attorney for the powerful Southern District of New York. During his time as U.S. Attorney, Bharara’s aggressive prosecutions earned him the nickname “Sheriff of Wall Street” and he became a hero in some Democratic circles over a showdown with Trump who dismissed him in 2017.
Neither Gensler or Bharara, however, are likely to be Biden’s ultimate choice, according to some Washington, DC, insiders. The head of one finance trade industry group, who spoke on the condition of anonymity, told Fortune that Bharara’s crusading streak makes him radioactive to Republicans, and that Senate confirmation would be impossible—a view shared by others interviewed for this story. As for Gensler, the influential banking lobby is reportedly concerned about increasing diversity at the top ranks of finance, which means a white male is unlikely for the pick.
As for who Biden will choose, the trade industry source said the most likely picks include former SEC Commissioners Annette Nazareth and Kara Stein. As both are regarded as moderate and as they have been previously confirmed by the Senate, their appointment would likely be uncontroversial. The source also named Keir Gumbs, a top lawyer for Uber who is Black, as another person who will receive serious consideration.
Whoever takes the helm of the SEC will inherit an agency that, under Clayton’s tenure, has been relatively free of the conflict and politics that have wracked other federal departments in the Trump era. According to a current SEC lawyer, Clayton has won the respect of agency staff as a result of his non-partisan style and straightforward demeanor.
“The SEC doesn’t try to hide the ball. They’re transparent in what they’re going after,” said the lawyer, who also credited Clayton for being supportive of the agency’s staff who have been working from home in the COVID era.
Clayton’s tenure hasn’t been entirely without controversy. His agency went after maverick Tesla CEO Elon Musk for erratic tweets that disclosed non-public information, fining Musk and the company a total of $40 million. The SEC under Clayton was also instrumental in pursuing Theranos, the disgraced blood testing startup whose purported medical breakthroughs turned out to be a pack of lies.
And despite occasional Democratic complaints about leniency, the SEC under Clayton brought a record 3,152 enforcement actions, including ones against cryptocurrency scams. Under a Biden administration, the incoming SEC Chair could well exceed that tally.
