- The Washington Times - Tuesday, July 26, 2005


President Bush’s choice to lead the Securities and Exchange Commission, Rep. Christopher Cox, said yesterday that his top priority would be “vigorous enforcement” of the securities laws to protect investors and thwart fraud.

Eyeing recent 3-2 votes by the SEC commissioners on several contentious issues, Mr. Cox also told the Senate Banking, Housing and Urban Affairs Committee at his confirmation hearing that he would strive to achieve greater consensus among the five members of the panel.

Mr. Cox, a free-market conservative who significantly could shift the agency’s focus from its recent activist regulatory stance, said the SEC “must be vigilant in behalf of investors and stalwart against fraud and unfair dealing.”

“My top priority will be vigorous enforcement of our securities laws,” the California Republican told the committee.

The president last month picked Mr. Cox to lead the SEC after the surprise resignation of Chairman William H. Donaldson, whom Mr. Bush had installed to help restore confidence in a stock market shaken by corporate scandals in 2002.

Business interests, which had chafed at Mr. Donaldson’s regulatory activism and pressed the White House to replace him with someone friendlier to them, have welcomed Mr. Cox’s nomination. Some investor advocates and union leaders have urged senators to reject him, saying he would disregard investors’ interests and protections.

Mr. Cox said that if confirmed he hoped to build on Mr. Donaldson’s record, which he termed as one of “great achievement.”

Mr. Cox, 52, chairman of the House Homeland Security and Governmental Affairs Committee, is a former corporate lawyer who has been in Congress for 16 years. He is expected to win Senate approval.

“Congressman Cox brings a wealth of experience to this position, and I believe that the SEC and the securities markets will benefit from his leadership,” said Sen. Richard C. Shelby, Alabama Republican and chairman of the banking committee.

At the confirmation hearing, the panel also was considering the nominations of Roel Campos and Annette Nazareth to fill the two Democratic seats on the SEC.

Senate Democrats had insisted that the two nominations be packaged with that of Mr. Cox. Mr. Bush named Miss Nazareth, director of market regulation at the SEC, to replace Commissioner Harvey J. Goldschmid, who plans to leave soon to resume teaching law at Columbia University. Mr. Campos was nominated for a second term.

The five commissioners have split in an unusual alignment over several key issues, with Bush appointee Donaldson siding with Mr. Campos and Mr. Goldschmid against his two fellow Republicans, Paul S. Atkins and Cynthia A. Glassman, as they have voted against some regulatory initiatives. Mr. Cox is widely expected to take positions more closely aligned with Mr. Atkins and Miss Glassman.

“I will undertake … to do my level best to seek the common ground,” Mr. Cox said.

when questioned on the matter at the hearing.

In the House, Mr. Cox wrote legislation that made it easier for companies to defend against some types of lawsuits by shareholders. He has opposed efforts to treat companies’ awards of stock options to employees as expenses against the bottom line, taking the side of the high-tech companies that dot his Orange County, Calif., district.

Mr. Donaldson had supported mandatory expensing of stock options, a change that could sharply reduce the reported earnings of many big companies, especially in the high-tech industry. Asked about the issue at the hearing, Mr. Cox acknowledged that new rules set by the Financial Accounting Standards Board requiring public companies to record employee stock options as an expense are going into effect despite congressional efforts to override the FASB.

Mr. Cox affirmed the independence of the accounting rule-maker in his response to senators’ questions.

Mr. Cox “is a defender of corporate interests whose legislative record indicates he would not protect investors if he were confirmed,” the watchdog group Public Citizen said Monday.

Mr. Cox is the first member of Congress to be nominated to lead the 70-year-old SEC. His confirmation would put him in the unusual position of potentially regulating companies that donated money to his campaigns.

Mr. Cox’s largest financial backers during his congressional tenure include law firms and big accounting firms. Securities and investment firms have donated more than $254,000 to Mr. Cox, according to the Center for Responsive Politics.

Some Democrats on the banking panel are interested in Mr. Cox’s work as a securities lawyer in the 1980s for First Pension Corp., a company accused by the government of defrauding investors. The SEC sued First Pension in 1994 for bilking investors out of hundreds of millions of dollars. Its founder, William Cooper, pleaded guilty to felony charges and received a prison sentence.

Mr. Cox has denied any knowledge of wrongdoing by the company and its executives. He was removed as a defendant in a lawsuit by First Pension shareholders.

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