SEC nominee Cox, two Dems to face Senate panel
By Kevin Drawbaugh
WASHINGTON (Reuters) – Rep. Christopher Cox, the White
House’s pick to head the U.S. Securities and Exchange
Commission, will face tough questions on stock option
accounting and his record as a private-sector lawyer at a
Senate hearing on Tuesday, congressional aides said.
But these and other flashpoints, like mutual fund
governance and hedge fund regulation, look unlikely to derail
Cox’s bid to become the nation’s top market cop, they said.
With Congress focused on filling a Supreme Court vacancy,
changes at the SEC are being overshadowed with swift
confirmations probable for both Cox and two Democratic SEC
nominees, the aides said.
Barring controversy, all three nominations “could be
confirmed by the (banking) committee and the full Senate before
the Senate summer recess,” said Jesse Jacobs, spokesman for
Maryland Senator Paul Sarbanes, senior committee Democrat.
Cox, 52, was nominated last month by President Bush to take
over the investor protection agency from William Donaldson, who
quit on June 30 after two years on the job.
A free-market conservative who has represented a well-to-do
Los Angeles suburb in the House for almost 17 years, Cox has
been strongly endorsed by Republicans and industry groups
chafing under SEC rules adopted in a post-Enron crackdown.
Democrats, unions and some investor advocates — fearful of
a regulatory roll-back — have expressed concern.
The consumer rights group Public Citizen issued a report on
Monday that said, “The anti-investor record of Rep. Christopher
Cox … should disqualify him from leading the agency.”
Amid such opposition, Cox’s positions on key issues are
unclear and senators can be expected to try to pin him down.
For instance, aides said, questions will be asked about his
views on a new rule requiring companies to treat stock options
as a routine business expense. The Financial Accounting
Standards Board rule is opposed by much of the high-tech
industry. Cox’s home district is a high-tech hotbed.
His legislative record will likely get a hard look, as
well. Key among his achievements was a 1995 bill that made it
more difficult for investors to sue companies for fraud.
The former securities lawyer may also be asked about work
he did in the 1980s for First Pension Corp., a California
financial firm later accused of fraud by the SEC, they said.
SEC enforcement and policy will get close scrutiny, with
senators keen to hear Cox’s views on demands from corporate
America for relaxation of post-Enron reforms and an easing of
the SEC’s recently aggressive enforcement stance, aides said.
Also, the SEC has been sued by business lobbyists over a
rule requiring mutual fund directors to be more independent of
fund managers. Cox’s views on the matter are not known. Nor is
his stance on an SEC push to regulate hedge funds.
The banking committee will consider the Cox nomination
along with those of two Democrats: incumbent SEC Commissioner
Roel Campos and SEC staff member Annette Nazareth.
Campos is a businessman and former government prosecutor
from Texas who has been on the SEC for three years. He is being
renominated for a term that would run to June 2010.
Nazareth has been director of the SEC Division of Market
Regulation since 1999. She is being nominated to fill out a
term that would expire in June 2007.