JJB Blog

Christopher Cox has been nominated chair of the Securities and Exchange Commission. Public Citizen has released a 30 page report asserting that he is the wrong person for the job. Some excerpts from the press release:

Public Citizen analyzed both Cox’s voting record and the legislation he has sponsored during his years in the U.S. House of Representatives. The analysis shows that:

[snip]

• Although Cox is often cited as having supported the Sarbanes-Oxley corporate reform act of 2002 – the most significant investor protection legislation of the post-Enron era –    each of seven committee and floor votes Cox cast on amendments to the bill was against stronger investor protection. Cox also displayed little concern for the bill when it was in committee, missing 7 of 13 committee votes.
• Despite having seven chances, Cox did not cast a single pro-investor vote on retirement investment protection bills that moved through the U.S. House of Representatives after employees of a number of companies, including Enron, saw retirement savings wiped out. He voted to ease conflict-of-interest standards for financial advisors; against giving employees a seat on the board of directors of their own retirement plans; and against allowing employees to freely sell company stock held in their retirement plans.
• Cox has voted to block efforts by the SEC and the Financial Accounting Standards Board to require corporations to expense the value of stock options granted to employees.
• Cox is the named sponsor of 178 pieces of legislation, but just four of them – 2.2 percent – have dealt with securities issues. An energetic co-sponsor of legislation, Rep. Cox has lent his name to 1,988 pieces of legislation. Yet only 19 of them – 1 percent – have dealt with securities.
• Excluding legislation judged to be neutral, 69 percent of the securities-related legislation Cox has sponsored or co-sponsored has been against investor interests.
• Cox’s signature legislative achievement – his sponsorship of the Private Securities Litigation Reform Act of 1995   – made it substantially more difficult for investors to sue to recover losses due to fraud. Moreover, evidence is now emerging indicating that the act, ostensibly aimed at so-called frivolous lawsuits, is having the effect that critics feared: barring meritorious lawsuits in which investors are legitimately entitled to recover damages. The original version of the bill that Cox introduced would have provided even more avenues for companies to dodge liability for fraud.
• The other major securities-related bill Cox sponsored sought to interfere with the work of accounting standard-setters and to preserve a method of accounting widely criticized for its potential to be used to mislead investors and allow companies to paper over problems.

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