July 26, 2005
Cox's Priorities at the SEC
Posted by Gordon Smith

Christopher Cox testified this morning before the Senate Committee on Banking, Housing and Urban Affairs in his confirmation hearings. He praised Chairman Donaldson's term as one of "great achievement" and expressed his commitment to concensus rulemaking, avoiding the divisive 3-2 votes that came to characterize Donaldson's SEC. My hunch is that the departure of Harvey Goldschmid will improve his chances of accomplishing this goal.

In his opening statement (pdf), Cox identified his four priorities as Chairman of the SEC:

  • Enforcing securities laws (policing "fraud and unfair dealing")
  • "Cultivating respect for the rule of law in our capital markets"
  • Making sure the agency's rules are keeping up with changing technologies
  • Ensuring that financial markets can withstand terror attacks

Although he mentioned that the SEC would implement the stock options expensing rule ("I will ensure that the Securities and Exchange Commission builds upon the record as already established and that the rule is implemented as the markets expect."), he did not say much about new initiatives, like the director nomination rule.

In this regard, I am particularly interested in his second priority: "Cultivating respect for the rule of law in our capital markets." Elaborating on this goal, he observed, "There is no better means to this end than continuity, clarity, and consistency in the Commission's rule-making and enforcement responsibilities." What does this mean?

Given Cox's history, I doubt that he intends to embrace Donaldson's regulatory agenda. Actually, I suspect that he means something quite different when he refers to "continuity, clarity, and consistency." To me this sounds like a person who believes that effective enforcement of the current rules, coupled with incremental advances consistent with those rules, will do the trick.

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