SEC nominee faces conflict questions; Disruptive families

Receiving Wide Coverage ...

Dick Duane

Questions: Jay Clayton, the Sullivan & Cromwell partner and President Trump's nominee to head the Securities and Exchange Commission, "faces a range of possible conflicts of interest due to the long list of banks and public companies he has represented as one of Wall Street's top lawyers," the Wall Street Journal reports. That list includes Ally Financial, Barclays, Goldman Sachs and Deutsche Bank. His resume "may reinforce a view among consumer groups and Democratic lawmakers that he could have conflicting interests as a Wall Street regulator," according to the New York Times. In addition, Clayton's wife is a financial adviser at Goldman, although she plans to resign if her husband is confirmed by the Senate. Wall Street Journal, New York Times

Wall Street Journal

We are family: So-called family offices, which manage the fortunes of wealthy families, are becoming a "disruptive force" on Wall Street, the Journal reports. "The offices are alternately linking up with buyout firms and competing against those firms to do acquisitions. They are providing financing to startups. They are buying distressed debt, real estate and esoteric insurance products. They are lending to companies and occasionally going into battle with companies as activist shareholders." While such transactions have traditionally been the domain of big companies or private-equity firms, family officers have moved into the space, "making their presence felt with their growing numbers, fat wallets and hunger for deals."

Done deal: Lebenthal Holdings has reached a deal to sell most of itself, "closing the latest chapter in Alexandra Lebenthal's decade-long bid to revive her family's Wall Street business." South Street Securities Holdings said it agreed to buy Lebenthal's asset management business plus 49% of its capital markets unit; Ms. Lebenthal would keep the rest.

Free FICO: Experian and Fair Isaac are expanding a partnership that would let more consumers see their FICO scores for free. The program, which is being offered through Experian, would allow more lenders to provide FICO scores to their customers on their websites.

New KPMG chair: William B. Thomas was named global chairman of KPMG. Thomas, a 28-year veteran of the big accounting firm who has been head of KPMG's Americas region since 2014, will serve a four-year term, effective October 1. He will succeed John Veihmeyer, who is retiring at the end of September.

Financial Times

Giving: Wall Street firms spent a record $2 billion on lobbying and campaign contributions during the last election cycle, "as big banks, hedge funds and other financial institutions stepped up efforts to reshape rules to their advantage," the FT commented. That was about a third more than the previous presidential cycle and 25% more than the previous record in 2008. The totals included contributions of $1.1 billion plus another $898 million spent on lobbyists, according to Americans for Financial Reform.

The quants are back: Quantitative investing, which got a black eye 10 years ago, "is once again the hottest trend in finance," the FT reports. Client assets have now risen eight consecutive years, doubling since 2009 to $918 billion. But "even this understates the interest, as many traditional hedge funds and big mutual fund managers are all trying to blend more quantitative techniques with their traditional approaches."

Quotable ...

"We're all just starting to recognize that we should be a more important part of the investment world than we historically have been as a group." — Kenny Springfield, an executive at Perot Investments, which manages the Perot family fortune