U.S. Securities and Exchange Commission Chairman Jay Clayton was surprised and dismayed by the political battle that quickly erupted over his pending nomination to be the top federal prosecutor in New York, said people familiar with the matter.

Now, as it becomes clear that he may face insurmountable hurdles to winning Senate confirmation for the U.S. attorney post, some of Clayton’s close advisers are urging him to withdraw from consideration and announce that he’s staying at the helm of Wall Street’s regulator. Clayton hasn’t yet made a decision, the people said.

Many SEC employees, including top officials appointed by Clayton, had no idea that a job change was in the offing. Several said they were flabbergasted that the cautious corporate lawyer would want to jump into the fray at the Manhattan prosecutor’s office, which has conducted high-profile investigations into some of President Donald Trump’s associates, including his personal lawyer Rudy Giuliani.

Clayton had been discussing the job with Attorney General William Barr and other Trump administration officials for several weeks or more, according to the people, who requested anonymity to discuss the matter. Though Clayton has golfed with Trump, including at the president’s Bedminster, New Jersey, club this month, the two aren’t known to be especially close.

The SEC chief is a political independent, and while he’s cultivated tight relationships at the White House, he’s mostly steered clear of partisanship and cast himself as a moderate financial regulator focused on protecting retail investors.

Before Trump appointed him to run the SEC, Clayton was a partner at Sullivan & Cromwell in New York, where he represented Goldman Sachs Group Inc. and other major banks. Many of his friends and colleagues assumed he would return to the law firm after his stint in government.

According to the people familiar with the nomination, Clayton thought his experience leading the SEC’s enforcement efforts would translate well to the U.S. attorney job, even though he doesn’t have the prosecutorial background often seen as requisite for the position. Another attraction was that the job would allow him to be in New York, where his family lives. He’s been commuting to Washington for work since taking the SEC job in 2017.

A spokeswoman for Clayton at the SEC declined to comment.

Attorney General
Clayton, 53, saw the Southern District of New York position as one more likely to be offered during a second Trump term, if the president is re-elected, the people added. Some of the advisers noted that the high-profile post has often provided an inside track to becoming U.S. attorney general, a job Clayton was eyeing down the road.

That plan started unraveling on Friday night after Barr released a statement that announced the pending nomination of Clayton and the resignation of Geoffrey Berman, the sitting U.S. attorney. Berman quickly responded that he hadn’t actually quit and wasn’t planning to step down.

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