By Pam Martens and Russ Martens: January 31, 2018
When Jay Clayton, President Donald Trump’s pick to head Wall Street’s top cop, the Securities and Exchange Commission, was preparing for his Senate confirmation in March of 2017, the watchdog nonprofit, Public Citizen, requested in a formal letter that the Senate Banking Committee investigate Clayton’s family ties to a mysterious company called WMB Holdings.
On the day of the confirmation hearing, March 23, 2017, David Dayen penned this breathtaking assessment at The Nation:
“Clayton’s family gets millions of dollars in annual dividends from a private company named WMB Holdings, some of which Clayton plans to retain even if confirmed. This company and its affiliated partners (Delaware Trust Co and CSC) are conduits for creating shell corporations and other sketchy vehicles used in tax evasion and money laundering. Public Citizen found apparent links between these companies and Mossack Fonseca, the notorious Panamanian law firm at the center of the Panama Papers scandal.”
Yesterday, Susan Antilla and Gary Rivlin, both Reporting Fellows with The Investigative Fund at The Nation Institute, filed a powerful look at Clayton’s conflicts and tenure at the SEC since his confirmation. That mysterious WMB Holdings came up again. Antilla and Rivlin wrote at The Intercept that the Clayton family’s stake in WMB Holdings, “held by his wife and children through a series of family trusts” is generating “more than $4 million in dividends per year.”
Pause for a moment and think about that: what is the market value of an asset that generates $4 million in dividends annually. As a gauge, it would take $200 million in a stock that pays a 2 percent dividend to generate $4 million in annual cash flow. In other words, this is clearly a massive part of the family’s net worth, if not the overwhelming part. And yet, the Senate Banking committee was not curious enough to drill down to find out what this company is all about, despite a detailed request from Public Citizen, which even posed the questions that should be asked.
Clayton’s wife is Gretchen Butler Clayton, a Vice President of Goldman Sachs who had worked there for 17 years when Clayton was nominated for the SEC post. (She has since stepped down.) Jay Clayton was also outside counsel to Goldman Sachs for years as a partner at the powerful Wall Street law firm, Sullivan & Cromwell.
Gretchen Butler Clayton is the daughter of Daniel Butler who served as CSC’s chief executive officer from 1975 to 1998. WMB Holdings and CSC share the same address: 2711 Centerville Road, Suite 400, Wilmington, Delaware. According to the Delaware Business Times, Daniel Butler and his family, are now owners in the company.
But WMB Holdings (listed as the parent of CSC) and CSC are not the only companies using Suite 400 at 2711 Centerville Road in Wilmington, Delaware as their official address. According to a record search, multiple units of Goldman Sachs are also using the same address as WMB Holdings. A sampling includes Goldman Sachs Merchant Banking Access Fund 2006, L.P and Goldman Sachs Money Markets, Inc. among numerous others.
But it’s not just Goldman Sachs using CSC’s address. Other major publicly traded corporations that fall under the supervision of the SEC are using the address as well. That list includes Monsanto, Boeing, Cisco, Capital One and the securities unit of Credit Suisse. Delaware has become a preferred state to register a business because of the dearth of information it discloses to the general public and its pro-business court system.
Clayton writes in his Form 278e Public Financial Disclosure the following about the family’s WMB Holdings:
“Pursuant to a 2006 marital agreement, filer [Jay Clayton] unconditionally disclaimed and agreed not to assert any right to or interest in this asset or any of the trusts reported as assets 45, 46, 47, 48, 57, 58, 59, 60, 61, 62, 63, 64, 65 and 66. Filer’s spouse and children are beneficiaries of these trusts. To date, filer’s spouse and children have not received any distributions from these trusts.”
Clayton, as a long-tenured law partner at Sullivan & Cromwell, should know that the law requires much more of him. Specifically, under 18 U.S.C. § 208, the basic criminal conflict of interest statute, an executive branch employee is prohibited from participating personally and substantially in a government matter that will affect his own financial interests, as well as the financial interests of his spouse.
There are thousands of businesses using CSC as their registered agent and using CSC’s address as their legal address. Some, indeed, are mentioned in the Panama Papers. Clayton’s wife and his children appear to have tens of millions of dollars tied up in this company with only vague public disclosures as to how much this asset is worth, how much of the company they own, and what kind of due diligence it is doing before setting up offshore tax havens or registering companies later charged with money laundering.
It’s time for the Senate Banking Committee to do its job and get to the bottom of this.