In a few months, Jay Clayton will get his wish: He will get to go home. His four generally untroubled but still unhappy years by the Potomac shall be at an end, and he can resume his life where he belongs, in New York City.

Whether he crosses the Hudson in triumph or as one of the many refugees from former President Donald Trump’s Washington depends on the outcome of November’s election. Clayton, however, clearly still has his eye on the top prosecutorial job this side of Bill Barr’s, and the only way to get it is to both see Trump reelected and to remain on his good side. There’s not very much he can do about the former (although the man he hopes is his future boss is doing his best), but after three years of more or less doing nothing, he can certainly continue his hyperactive remaking of the SEC in his patron’s image.

Commissioners voted 3-2 to pass a final rule requiring shareholders to hold $25,000 of stock for a year, up from $2,000 currently, in order to submit such proposals…. The new rule also raised the percentage of votes that proposals must receive to be resubmitted—and prohibits multiple shareholders who don’t individually meet the minimum thresholds from joining together to submit a proposal…. Critics of the move said it was the Trump administration’s latest effort to stymie Wall Street’s growing focus on environmental, social and governance—or ESG—issues, which are the subject of most shareholder proposals.

That’s the kind of democracy a Trump can get behind! And that’s not all.

The new rules would allow the SEC to streamline the award evaluation process, particularly for certain awards of $5 million or less. The adopted amendments provide a presumption of a statutory maximum award percentage at 30% for awards that are estimated to be $5 million or less, assuming that there were no negative factors…. For awards estimated to be more than $5 million, the SEC would analyze more deeply positive and negative factors in determining a final award amount, the agency said. If there are no negative factors, a tipster can expect to receive an award that is in the top third of the range, according to the final rules published Wednesday….

“I think this is particularly problematic,” Erika Kelton, a partner at Phillips & Cohen LLP, said, noting that the consideration of the size of the payouts wasn’t a factor that Congress adopted when it enacted the law in 2010. She said her clients and potential whistleblowers are concerned about the new rules. “The rules do not bring clarity to the awards process and actually bring more uncertainty.”

Well, Jay, if things don’t work out exactly as you hope, you can at least look your president and your future clients in the eye and sincerely say you did your best for them.

SEC Raises Bar for Shareholder Resolutions [WSJ]
SEC Votes to Amend Whistleblower-Award Rules [WSJ]

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