Bush nominee insists he will stay true to SEC mission of investor protection

By Andrew Parker
July 27 2005

Christopher Cox, the Republican congressman chosen by President George W. Bush to be the next chairman of the Securities and Exchange Commission, yesterday insisted he would stay true to its mission of investor protection. He promised vigorous enforcement of the securities laws, and signalled he would not seek to undo ambitious rules for capital markets introduced by William Donaldson, who resigned as SEC chairman last month. Mr Cox also said he would try to put an end to divisions at the financial regulator that dogged Mr Donaldson's tenure.

In his first public comments about the SEC since Mr Bush nominated him last month, Mr Cox told the Senate banking committee: "My top priority will be vigorous enforcement of our nation's securities laws. The Commission must be vigilant on behalf of investors." Some investor groups fear Mr Cox could pursue a deregulatory agenda because of his business-friendly record in Congress, which could lead him to unpick Mr Donaldson's ambitious reforms of mutual fund governance, hedge fund oversight and stock trading rules.

But Mr Cox said Mr Donaldson's record was "one of great achievement". "I would hope to build on that and extend it," he added. He also signalled he would not seek to scrap a controversial accounting rule that requires companies to treat awards of stock options as expenses and make deductions from profits. Mr Cox opposed the accounting standard in Congress but he said the rule had been debated and should be implemented as the financial markets expected.

Yesterday's hearing could pave the way to the Senate confirming Mr Cox's appointment, together with two Democratic nominees to the SEC, before the weekend. Mr Cox strongly endorsed the 2002 Sarbanes-Oxley law on accounting and corporate governance, passed in response to corporate scandals such as Enron. Mr Cox made no commitment to reforms, but he expressed an interest in giving investors more information about executive pay. He also said he was willing to revisit the issue of giving shareholders more powers to nominate directors to troubled companies.

Senator Paul Sarbanes, the Democrat who co-authored the Sarbanes-Oxley legislation, asked Mr Cox if the US Chamber of Commerce was wrong to greet his proposed appointment with the claim that the "pendulum is swinging back" in favour of business. Mr Cox said that it was wrong to suggest he would be "lax on enforcement" or not pursue "appropriate regulation".

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