The president formally nominated U.S. Rep. Christopher Cox, R-Calif., yesterday to serve as chairman of the Securities and Exchange Commission...
WASHINGTON — The president formally nominated U.S. Rep. Christopher Cox, R-Calif., yesterday to serve as chairman of the Securities and Exchange Commission, setting the stage for a dramatic shift in the agency’s priorities, which lately have been focused on new regulation and stepped-up enforcement.
If confirmed by the Senate, he will replace William Donaldson, who said Wednesday he will leave June 30. During Donaldson’s 2 ½-year tenure, the SEC marked its most active period since the agency’s founding during the Great Depression.
Cox, 52, a congressman from Orange County since 1988, is best known as the high-profile chairman of the House Committee on Homeland Security.
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A graduate of Harvard Law School and Harvard Business School, he has served on several committees with oversight over securities regulation.
Cox has taken pro-business positions on many issues. He sponsored legislation that curtailed plaintiffs’ right to bring lawsuits alleging securities violations and opposed a regulatory drive to treat stock options as expenses, fighting on the side of the technology firms that constitute much of his Orange County constituency.
Cox was a White House lawyer during the Reagan administration and a corporate attorney specializing in securities law with the firm of Latham and Watkins before being elected to Congress.
He calls himself “a leading advocate of economic growth through lower taxes, free enterprise and limited government” in a biographical sketch on his Web site.
President Bush yesterday appointed U.S. Rep. Christopher Cox, R-Calif., as chairman of the Securities and Exchange Commission.
Education: B.A., University of Southern California, 1973; MBA, Harvard University, 1977; JD, Harvard University, 1977.
Experience: U.S. Republican congressman from California, 1988-present; chairman, Committee on Homeland Security, January 2005-present; chairman, Select Committee on Homeland Security, 2003-04; chairman, House Policy Committee, 1994-2005; chairman, Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China, 1997-2000; senior associate counsel to President Reagan, 1986-88; co-founder, Context, St. Paul, Minn., 1984-86; lecturer on business administration, Harvard Business School, 1982-83; partner, Latham & Watkins law firm, 1978-82, 1984-86; law clerk to Judge Herbert Y.C. Choy, U.S. 9th Court of Appeals, 1977-78.
Family: Wife, Rebecca; children Charles, Katie and Kevin.
Quote: “There is a reason that fiscal restraint is a traditionally conservative value. Big government requires big spending and, therefore, a comfort level in taking and using the fruits of other people’s labor. It is a comfort level found in socialism, not conservatism.”
“The free and efficient movement of capital is helping to create the greatest prosperity in human history,” Cox told reporters at the White House yesterday. “The natural enemies of this economic marvel are fraud and unfair dealing.”
In announcing his selection, 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 supported the Sarbanes-Oxley Act of 2002, Congress’ response to the corporate-accounting fiascoes. The law ordered the most far-reaching changes in corporate accountability since the Depression, imposing stiff new rules on companies and their top executives.
In selecting Cox, the Bush administration chose a candidate whose background is far different from his predecessor’s.
Donaldson, 74, was a Wall Street titan pressed into service toward the end of a long, distinguished career as an investment banker and head of the New York Stock Exchange, immune to pressure to earn a living after he left government.
“I’m trying to go back in my memory to think about when the last time a sitting politician was nominated to lead the SEC,” said Duke University law professor James Cox, who is not related to the congressman.
The SEC position is subject to Senate confirmation, a process that left Cox bruised once before.
He was in line for an appointment to the U.S. Court of Appeals in 2001 when Democrats temporarily gained control of the Senate.
Facing opposition from at least one of California’s two Democratic senators, Cox realized he faced a difficult fight to win confirmation to the bench without a guarantee of success. He withdrew his name.
Yesterday, Senate Banking Committee Chairman Richard Shelby, R-Ala., called Cox “an outstanding choice to guide the SEC at an important juncture.” Sen. Charles Schumer, D-N.Y., said he hoped Cox would be both “pro-business and pro-regulation.”
The AFL-CIO, meanwhile, slammed Cox’s nomination.
“Rep. Cox’s interest in the securities laws appears to be his belief that CEOs should be allowed to recklessly lie to their investors and not be held accountable for their actions,” said AFL-CIO Associate General Counsel Damon Silvers.
Cox would be the Bush administration’s third SEC chief. Donaldson was brought in after the controversy-filled 15-month chairmanship of securities lawyer Harvey Pitt.
Under Donaldson’s watch, the agency hired 1,200 new employees and brought a record 1,700 enforcement actions against securities violators, collecting about $7 billion.
But business groups have begun to complain the SEC has gone too far in interpreting Sarbanes-Oxley and that the law’s compliance costs outweigh its benefits.
Securities Industry Association leaders called the Cox nomination an opportunity for the agency to “reassess burdensome, duplicative, costly” regulations. AeA, a technology group, praised his “staunch” past support.
The five-member SEC could be on the verge of dramatic change with Donaldson’s exit and the departure of the panel’s two Democrats, both of whose terms end this year.
Democrat Harvey Goldschmid will leave this fall to resume teaching at Columbia University. The term of Democrat Roel Campos expires later this year.
Senate Democrats have proposed elevating SEC market-division director Annette Nazareth to fill Goldschmid’s shoes, but the White House has not acted on the recommendation.
Investor advocates said Donaldson’s departure probably means the death of a proposal that would give shareholders more power to nominate corporate directors.
Donaldson had issued a proposal, but it bogged down amid complaints from trade groups and Treasury Secretary John Snow.
Jake Zamansky, a New York lawyer who has sued Merrill Lynch and banks on behalf of investors, expressed concern. “Cox has to realize that the mission of the SEC chairman is to protect investors and not the interests of corporate America,” he said.
“As a congressman, he championed business interests. Hopefully, he’ll see the light, but it’s not often that the leopard changes his spots.”
Washington Post reporter Jeffrey H. Birnbaum contributed to this report. Information about the confirmation process and Cox’s support for Sarbanes-Oxley provided by The Associated Press. AFL-CIO reaction provided by MarketWatch. Zamansky comments from USA Today.
Duke University law professor