The Christopher Cox enigma continues. There has been a great deal of quiet nashing of teeth that has gone on regarding Cox's essentially unopposed nomination and confirmation as the new SEC chair. But who is this guy, really, and what does he mean for the SEC? By his own statements, Cox is a supporter of the SEC's recent reforms and on-going activist position. By the accounts of others, however, he's a one-man deregulatory dervish waiting to happen.

Round and round and round it goes...and where he stops? Well, who knows?

Via Bloomberg:

SEC's Cox May Not Relax Rules, Fines, Disappointing Business

Aug. 1, 2005
By Lawrence Arnold
Bloomberg News

Christopher Cox, the newly confirmed chairman of the U.S. Securities and Exchange Commission, may not offer much regulatory relief to the businesses that backed his 16- year career in the House of Representatives. During his confirmation hearing before the Senate Banking Committee last week, Cox, a 52-year-old California Republican, alleviated concerns among some lawmakers that he would undo SEC regulations imposed under his predecessor, William Donaldson.

"He clearly took positions which are consensus-building, in terms of not wanting to reopen recent tough votes, not wanting to step back on the enforcement program,'' said Joel Seligman, an securities law expert who's now president of the University of Rochester in New York. ``That's what people, particularly on the Democratic Party side, wanted to hear.''

The Senate unanimously confirmed Cox late July 29, after his pledge to be a strong regulator averted a fight over his pro- business record in Congress. Senators also confirmed Roel Campos and Annette Nazareth as the two Democratic members of the five- member commission. Cox will serve until June 2009, Nazareth, 49, until June 2007. Campos, 56, who first became a commissioner in 2002, will remain until June 2010.

"The broad bipartisan support for his nomination underscores the quality of leadership and breadth of experience that Chris Cox brings to his new post,'' Paul Schott Stevens, president of the Investment Company Institute, said in a statement. "A strong, effective SEC is a matter of vital importance to mutual funds and their shareholders.''

Donaldson, who like Cox was an appointee of President George W. Bush, defied his fellow Republicans by voting with the commission's two Democrats during the past three years to impose new regulations on hedge funds, mutual funds and stock trading.

In his career as a congressman, Cox backed reductions in the taxation of dividends and capital gains, rules making it harder for investors to sue public companies and legislation banning state taxes on purchases from online retailers.

The SEC will probably become ``somewhat more pragmatic'' under Cox, said Robert Hillman, who teaches securities law at the University of California, Davis, Law School. ``I don't expect the SEC to be sharply divided on this, because I don't think Chairman Cox is going to be especially radical in trying to implement reforms.'' Among Cox's first challenges will be a U.S. Chamber of Commerce lawsuit. The business lobby opposed an SEC rule requiring that the chairman and 75 percent of the directors of a mutual fund be independent from its management company.

Donaldson, in one of his last acts as chairman, on June 29 cast the deciding vote to push through the mutual fund governance rule a second time. It had been rejected by a federal court eight days earlier. Donaldson, 74, ignored criticism from lawmakers, ex- SEC officials and business groups that the SEC was rushing the vote to prevent Cox from reconsidering the rule.

Cox has the chance to ``improve securities regulation by returning balance to the process and eliminating costly and unnecessary regulations,'' Daniel Ludeman, chief executive officer of Richmond, Virginia-based Wachovia Securities and chairman of the 600-member Securities Industry Association, said in a statement.

The Chamber of Commerce proposes that the SEC stop assessing large civil fines against companies and focus instead on punishing individuals. That may be a long shot, as the agency probably will feel pressure to continue imposing hefty penalties as a deterrent, said Peter Henning, who teaches courses in securities litigation and white-collar crime at Wayne State University Law School in Detroit. "People like to see large fines,'' Henning said. ``That plays well in the media too.''

In March, Time Warner Inc. agreed to pay $300 million to settle an agency probe, and Qwest Communications International Inc. last year accepted a plan to pay $250 million to settle allegations of accounting fraud. Neither company admitted or denied wrongdoing.

Cox has represented a heavily Republican congressional district in Orange County, California, since 1989. He will resign the House seat to take his new post at the SEC. Bush helped clear a path for Cox's confirmation by nominating Campos to a second term and Nazareth to a first term, as recommended by leading Senate Democrats. The package deal appealed to both parties.

Nazareth, the SEC's director of market regulation, will succeed Commissioner Harvey Goldschmid, who is leaving to return to teaching at Columbia University's law school. Campos, a former corporate lawyer, worked as a federal prosecutor at the U.S. Attorney's office in Los Angeles and co- founded a radio broadcasting company, El Dorado Communications Inc., in Houston before joining the SEC.

The original article appears here. And please also note the quotes in the above article from Daily Caveat friend, Peter Henning of the White Collar Crim Prof. Blog.

-- MDT

Labels: Peter Henning