Chris Cox – Wrong For The SEC

[paineinthearse]

http://www.americanprogressaction.org/site/apps/nl/newsletter2.asp?c=klLWJcP7H&b=700005

Chris Cox – Wrong For The SEC

President Bush yesterday nominated Rep. Chris Cox (R-CA) to chair the Securities and Exchange Commission. Through his work in the private sector – pushing the envelope of legal corporate behavior as a securities industry lawyer – and during his 16 years in Congress, Chris Cox has made a career out of weakening protections for investors and finding loopholes to protect bad corporate actors. He played a major role in creating the legal environment that produced a rash of recent corporate scandals, including Enron. OC Weekly reported that Cox “spearheaded efforts to torpedo protections for corporate investors and shield companies – like Enron – and their accountants – like Arthur Andersen – from investor lawsuits.” For the last two-and-a-half years, outgoing SEC Chairman William Donaldson worked very hard to repair the damage that Chris Cox helped produce. Appointing Chris Cox as SEC chairman will be a huge setback to the SEC's progress in restoring trust in the markets and may set the stage for more Enron-like abuse.

Chris Cox fought to weaken investor protections and made it harder for stockholders to sue. In 1995, Congress passed the Private Securities Litigation Reform Act. On the House floor, Cox called securities law a “legal torture chamber” and fought for the passage of the bill which provided near total legal protection to corporate executives, accountants and lawyers who made misleading statements. The bill was passed into law over President Clinton’s veto after much lobbying by Arthur Andersen and other accounting firms.

Cox’s bill protected corporate crooks – including Ken Lay. Cox’s bill made it much harder for plaintiffs to bring lawsuits. In addition, his law provided additional protections for executives who made inaccurate "forward looking statements" about the future of their companies to investors. So when, 12 weeks before the company declared bankruptcy, former Enron CEO Ken Lay told a reporter from Business Week that “the company was on solid footing” and that it was “looking forward to continued strong growth,” he was unlikely to face legal consequences.

Chris Cox fought to pass class action reform while named in a class action suit. Cox was named in a class action suit brought by the defrauded investors of First Pension. At the same time as he was named in the suit, Cox was holding hearings on the Hill on the Private Securities Litigation Reform Act, a bill that, according to the WSJ, would “sharply limit the circumstances in which investors could bring class-action lawsuits.” While the bill did not directly affect the case against him because the case was filed in state court, it could affect future actions brought against him in federal court.

Cox received hundreds of thousands of dollars from the securities and investment industry. Over his career in Congress, Cox has received over $254,000 from the securities and investment industry, the fourth-largest industry contributor to Cox. He received another $206,000 from the accounting industry. Taken together, the securities and accounting industries combine to form the largest industry contributor to Cox. He received $2,000 from William Cooper, owner of First Pension, but was forced to return the funds as controversy surrounding Cox’s involvement in the scandal grew.