Cox nominated to head SEC

[clinthopson]

Our cogressman, Chris Cox, has been nominated by Shrub to head the SEC.

I know Chris Cox, so I can speak from experience. Forget any further improvement of investor and ordinary shareholder protection from the SEC. Cox is the lapdog of developers and big corporations. Some call this "friendly to business" - horseshit!

The move to make the boards of mutual funds independent will fade away along with any other tightening of regulations.

I can't wait to see what rightie whacko takes Cox' place in the House.

[tristano's ghost]

Figures. The Bushies are all about feathering the beds of the rich and powerful. Ordinary Americans are screwed.

[Coda]

And your choice would be?

Cox supported the Sarbanes-Oxley Act of 2002, Congress' response to financial scandals at Enron Corp., WorldCom Inc. and other large companies. The law ordered the most far-reaching changes in corporate accountability since the Depression, imposing stiff new rules on companies and their top executives.

He also is a longtime advocate of repealing taxes on capital gains as well as on dividends.

[BFrank]

Originally Posted by Coda

He also is a longtime advocate of repealing taxes on capital gains as well as on dividends.

'nuff said.

[bostontricky]

Originally Posted by Coda

And your choice would be?

Cox supported the Sarbanes-Oxley Act of 2002, Congress' response to financial scandals at Enron Corp., WorldCom Inc. and other large companies

Sarbanes-Oxley passed the House 334-90, Repubs voting party-line with tepid Democratic support. Oxley sponsored the bill, along with 30 other Republican co-sponsors (and no Democrats).

And your point would be?

[Monte Smith]

Originally Posted by bostontricky

Sarbanes-Oxley passed the House 334-90, Repubs voting party-line with tepid Democratic support.

Was Sarbanes-Oxley passed by the House 334-90 or 423-3? Most internet resources say 423-2, although some say 334-90. Internet sources say the bill was passed by the Senate in 2002 unanimously, 99-0.

[Clay Fink]

Tom Delay is wondering what the Republicans in the House are going to do
without Cox.

[Al in NYC]

Par for the course of favoritism, protectionism, and corporate welfare taken by the "free" traders.

[GoodSpeak]

Originally Posted by clinthopson

Our cogressman, Chris Cox, has been nominated by Shrub to head the SEC.

I know Chris Cox, so I can speak from experience. Forget any further improvement of investor and ordinary shareholder protection from the SEC. Cox is the lapdog of developers and big corporations. Some call this "friendly to business" - horseshit!

The move to make the boards of mutual funds independent will fade away along with any other tightening of regulations.

I can't wait to see what rightie whacko takes Cox' place in the House.

Oh.

Hold me back.


The Bushies hired a Yes Man?






I am, uh.....shocked.

[bostontricky]

Originally Posted by Monte Smith

Was Sarbanes-Oxley passed by the House 334-90 or 423-3? Most internet resources say 423-2, although some say 334-90. Internet sources say the bill was passed by the Senate in 2002 unanimously, 99-0.

Here is where I got my numbers from (your mileage may differ). Someone else (Professors Smith? Jones?) can muck around and prepare a history; or you could save yourself the trouble and hit the sack early tonight.

[Monte Smith]

The site that you reference, BT, itself refences the office of the Clerk of the House, whose authority confirms your numbers. It's weird, though, because Wikipedia carries completely different numbers. Wikipedia is not an unimpeachable source, to be sure, but it is such a darn convenient one that I would be very disappointed to think it this untrustworthy. Anyway, you always have to check Wiki against other sources, and there are many other sources that also show apparently erroneous vote counts. Or were there two votes? Two bills? I dunno.

[bostontricky]

I would think that there were two separate versions of S-O based on a) the conflicting information and b) the near-unanimous vote in the Senate after a split vote in the House. Could a bill go from the House, then be revised in the Senate and passed back to the House for another vote?

[Monte Smith]

Originally Posted by bostontricky

I would think that there were two separate versions of S-O based on a) the conflicting information and b) the near-unanimous vote in the Senate after a split vote in the House. Could a bill go from the House, then be revised in the Senate and passed back to the House for another vote?

Crimony, if only there was somewhere we could turn to to learn how a bill gets passed by Congress.

[Monte Smith]

[claude]

Originally Posted by Coda

Cox supported the Sarbanes-Oxley Act of 2002, Congress' response to financial scandals at Enron Corp., WorldCom Inc. and other large companies. The law ordered the most far-reaching changes in corporate accountability since the Depression, imposing stiff new rules on companies and their top executives.

To be honest, being a non-American, I'm not all that familiar with S-O. But everything I have heard has seemed to indicate to me that this act has resulted in a lot of consultants getting big fees but no real substantive difference in terms of accountability. Anyone here have any direct knowledge of what this act has actually accomplished other than adding a lot of red-tape as a window dressing exercise? For example, if the Enron collapse happened today, would investors be any better off? Or even better could this legislation have prevented it from happening?

[clinthopson]

From today's LA Times

Michael Hiltzik:
Golden State
Cox's Past Ties to Con Man Raise Questions
In the halls of Congress, Rep. Christopher Cox (R-Newport Beach), who has just been nominated to be the nation's top securities regulator, stands out for his intelligence.

He reads math books for fun, issues position papers bristling with footnotes and features his two advanced Harvard degrees ("with honors") in his biography.

When it comes to the work he performed as a lawyer for one of the state's most notorious con men, however, he pleads ignorance.

Apparently he was unaware that William E. Cooper was a crook or that his company, First Pension Corp., was a fraud. In 1985, when Cox assured state securities regulators that a new Cooper investment scheme would be "low risk" and an absolute boon to small investors trying to save for retirement, he was apparently unaware that the scheme was really designed to hide the losses already incurred by Cooper's investors and to keep the scam alive. In 1991, when Cooper hosted a fundraiser for Cox at his Villa Park home, Cox thought of him as merely "an upstanding member of the community."

A few years after that, the fraud finally exposed, Cooper and two partners went to jail.

And now, Cox has been nominated by President Bush as chairman of the Securities and Exchange Commission.

"If his job is to ferret out fraud in the securities markets, then his role in the First Pension case is relevant," says Michael Aguirre, who represented a few hundred First Pension investors in a 1994 state court lawsuit and is now San Diego city attorney. Latham & Watkins, the law firm that employed Cox, eventually settled investors' claims against it on undisclosed terms.

Cox didn't respond directly to my questions about First Pension. It appears that the White House stashes its nominees for high office under a cone of silence pending their Senate hearings. But over the years, he has testily denied that he knew anything was awry during the two years he worked with the company. His defenders say his role was confined to helping prepare a preliminary securities offering, and that he left Latham years before the offering became final or the law firm got around to verifying the information it had been given by its client.

His spokesmen point out that Aguirre dropped him as a named defendant in the lawsuit, and suggest that Aguirre couldn't make a case against him. Aguirre says it was because suing a congressman presents unique difficulties, and that in return for dropping Cox from the case he secured an agreement that Cox's actions could be imputed to Latham in assessing its legal liability.

Indeed, documents relating to Cox's work remained in the legal record. The most prominent of these was a letter Cox wrote to California regulators in February 1985. In it he argued that Cooper's new fund venture would be "fair, just and equitable" to investors and thus wouldn't require particularly stringent oversight. Aguirre contends that, absent such efforts by Cox and other Latham lawyers, the regulators might have uncovered Cooper's fraud early on. Instead, the scam continued for nine more years.

It's proper to recall that First Pension was one of the most flagrant con schemes in Orange Country history, costing thousands of investors — most of them people with small nest eggs — as much as $130 million.

The firm's main business was selling trust deed investments to the unsophisticated. A trust deed is a subordinate mortgage often taken out by homeowners with poor credit and unprepossessing property. Investors who buy them think they're acquiring trustworthy securities paying high interest. But let the economy hiccup, and homeowners start falling behind or defaulting on their loans. The investments then plummet in value.

Scams involving trust deeds, which look good on the surface but rot from the inside out, seem to strike California as regularly as El Niño. By the mid-1980s, the rot was spreading at First Pension. So many of its trust deeds were in arrears or default that Cooper and his partners, hoping to conceal the disaster, rolled them into a pool and assigned each of their investors a pro-rata share of the total. The investors kept receiving monthly statements showing gratifying investment gains, but these were largely faked.

Then, apparently to further hide the losses, the operators decided to set up yet another fund and transfer some of the holdings yet again.

As a Latham associate, Cox was assigned to help get this new fund approved by the Department of Corporations, California's equivalent of the SEC. On Feb. 22, 1985, he wrote the agency a letter replete with statements that Aguirre later characterized in legal papers as "misleading," "manipulative," and "false."

Among other things, Cox suggested that there was no need for the agency to insist on appraisals of the trust deeds, because they would be "secured and over-collateralized." He added, amazingly, that no one knew how to reliably appraise a trust deed anyway — as though this were an argument in the investments' favor. As it happens, Latham later undertook such an appraisal itself, only to discover that 73% of its random sampling of deeds from First Pension's files were questionable.

Cox's defenders say that his letter didn't mischaracterize First Pension's existing business, because he was actually discussing a separate new venture, and only in hypothetical terms. But he also left a few arguably germane facts about his client out of the letter. He didn't inform the regulators that First Pension was already under investigation by the SEC. He didn't mention that the year before, the state Department of Real Estate had suspended Cooper's real estate license in connection with an alleged $577,000 fraud at another company.

Both facts were well known to Latham & Watkins, which suggests either that Cox's superiors allowed him to make incomplete representations to the state regulators; or that he deliberately stopped his ears against what might be pertinent information about his client; or that he knew and chose, for some reason, to keep mum.

Is Cox's relationship with First Pension worth exploring? It's one thing for this history to involve a lowly congressman, but quite another when it concerns a nominee to supreme regulatory authority. That's especially so given Cox's signal achievement in the regulatory field, the introduction of a 1995 law that dramatically scaled back investors' rights to file federal lawsuits alleging securities fraud. It has been hinted that one inspiration for the law was his resentment at Aguirre's lawsuit.

That law, along with his efforts on First Pension's behalf and his protestations of innocence and ignorance, raises important questions about Cox's approach to securities regulation. One hopes these questions will be aired thoroughly when the Senate ponders whether he's the right man to run the SEC.

They boil down to this: In the never-ending battle between investors and investment promoters, whose side will he be on?