Bush picks Cox to head SEC
Reuters | June 2, 2005
By Kevin Drawbaugh
WASHINGTON - President Bush on Thursday named Rep. Christopher Cox -- a champion of curbing investor lawsuits -- as the White House's choice to head the U.S. Securities and Exchange Commission, prompting academics to predict a major shift in the market-regulating agency's focus.
The California lawmaker, who faces a U.S. Senate review, would replace William Donaldson. On Wednesday, amid mounting criticism from some in business for his aggressive post-Enron reforms, Donaldson said he will step down on June 30.
At a White House announcement with Cox, Bush said, "In the years ahead, Chris will vigorously enforce the rules and laws that guarantee honesty and transparency in our markets and corporate boardrooms."
Cox, who has also pushed in Congress for lower taxes on investment income, is a graduate of both Harvard Law School and Harvard Business School. He has been in Congress since 1988 and was the first chairman of the Homeland Security Committee.
"The rule of law that the SEC enforces has given America the most dynamic and vibrant capital markets in the world," Cox said at the event with Bush.
He was an author of a 1995 law that critics charged made it more difficult to sue corporations.
From 1978 to 1986, Cox specialized in venture capital and corporate finance with the international law firm of Latham & Watkins in Southern California, a high-tech industry center.
"He'll be a formidable chairman, but it will be a major change in direction," said Columbia University Law School Professor John Coffee.
Technology companies, many in California, have been pushing the SEC to postpone a new accounting standard to require stock options to be treated as a routine business expense.
Cox served as a White House counsel to former President Ronald Reagan and on his congressional Web site describes himself as "a leading advocate of economic growth through lower taxes, free enterprise and limited government."
Joel Seligman, dean of the Washington University Law School in St. Louis and a noted SEC historian, said Cox is "very unsympathetic to private litigation."
"This likely portends a very dramatic shift in the direction of the SEC," Seligman said. "You're more likely to see an SEC that the Chamber of Commerce and the Business Roundtable are more comfortable with."
Donaldson was known for his strong enforcement agenda at the SEC and his resignation has raised doubts about whether the agency's tougher post-Enron stance on corporate misconduct will be sustained.
During his tenure he pushed through new rules affecting mutual fund governance, hedge fund advisers and stock market trading and pricing.
Some of Donaldson's initiatives angered business executives and their allies in the Bush administration, who said they raised the costs of doing business and discouraged risk taking.
Bush had praised Donaldson on Wednesday night in a statement, saying he "vigorously and fairly enforced our nation's securities laws and helped rebuild the public trust in corporate America that has been important to our economic recovery."