Judging by his past actions, Christopher Cox, the pro-business California Republican nominated by President Bush to head the Securities and Exchange Commission, is likely to steer the agency away from the activist path followed by former chairman William H. Donaldson, who resigned on June 30.
If confirmed by the Senate, Cox is likely to ease up on the crackdown on corporate fraud led by his predecessor in the wake of the Enron and other financial scandals. The agency already has tempered its stance in recent months in reaction to a corporate backlash over the costs of complying with the Sarbanes-Oxley Act.
Cox, a former securities attorney who wrote legislation curbing shareholder lawsuits in 1995, has received more than $254,000 in financial support from securities firms during his 16 years in Congress. He also opposed a move to treat stock options as an expense, pleasing his technology-firm constituents in California’s wealthy Orange County, or OC, as it is known in the Fox network TV show.
Cox, a graduate of Harvard Law School and Harvard Business School, was a senior associate White House counsel in the Reagan administration. While he has pledged to follow clear and consistently enforced rules at the SEC, he is widely expected to take a more business-friendly approach. He could back away from regulation of hedge funds, for example.
Wall Street observers are curious to know whether he will keep Linda Chatman Thomsen on as director of enforcement. She was appointed on May 12 and was expected to be an aggressive enforcer. Observers also will be watching to see if Cox will reconsider the new “trade through” rule requiring brokers to accept the best price for a trade even if stock markets must fill the order through a competitor.