WASHINGTON - July 25 - U.S. Rep. Christopher Cox (R-Calif.), who has been nominated to chair the Securities and Exchange Commission (SEC), is a defender of corporate interests whose legislative record indicates he would not protect investors if he were confirmed.
During his nine terms as a member of the U.S. House of Representatives, Cox has led efforts to make it harder for investors to seek redress for fraud and has not been an advocate for the independence of the very agency he would now lead, according to a report Public Citizen released today. Cox’s securities-related voting record is strongly anti-investor. On major legislation addressing corporate and accounting reform, investor legal rights and protection of retirement investments, Cox cast only one vote of 22 – 4.5 percent – in support of investors.
The report, Rep. Christopher Cox: His Anti-Investor Record Should Disqualify Him From Leading the SEC, is available here. Public Citizen released the report during a telephone press conference with labor representatives and investor advocates who questioned Cox’s fitness to serve as SEC chairman.
Cox’s nomination hearing before the Senate Committee on Banking, Housing and Urban Affairs is scheduled for Tuesday, July 26.
The SEC chairmanship is a particularly critical position given that half of U.S. households now own stock and that traditional pension plans have given way to 401(k) plans, heightening the importance of securities investments. While brokers, the stock exchanges and investment bankers have their own well-financed representatives, the main protector of investor interests is the SEC. Cox’s record, however, shows that he consistently values corporate interests over investor concerns.
“The United States cannot afford to have an SEC chairman who doesn’t put investors first,” said Public Citizen President Joan Claybrook. “Given the recent corporate crime wave and the enormous financial losses that so many Americans have sustained because of corporate misdeeds, it is essential that the SEC be headed by someone who will look out for the average investor.”
Public Citizen analyzed both Cox’s voting record and the legislation he has sponsored during his years in the U.S. House of Representatives. The analysis shows that:
On major legislation of interest to investors in recent years – the Private Securities Litigation Reform Act, the Sarbanes-Oxley Act and retirement investment protection matters – Cox cast only one vote out of 22 – 4.5 percent – in support of investors.
- Although Cox is often cited as having supported the Sarbanes-Oxley corporate reform act of 2002 – the most significant investor protection legislation of the post-Enron era – each of seven committee and floor votes Cox cast on amendments to the bill was against stronger investor protection. Cox also displayed little concern for the bill when it was in committee, missing 7 of 13 committee votes.
- Despite having seven chances, Cox did not cast a single pro-investor vote on retirement investment protection bills that moved through the U.S. House of Representatives after employees of a number of companies, including Enron, saw retirement savings wiped out. He voted to ease conflict-of-interest standards for financial advisors; against giving employees a seat on the board of directors of their own retirement plans; and against allowing employees to freely sell company stock held in their retirement plans.
- Cox has voted to block efforts by the SEC and the Financial Accounting Standards Board to require corporations to expense the value of stock options granted to employees.
- Cox is the named sponsor of 178 pieces of legislation, but just four of them – 2.2 percent – have dealt with securities issues. An energetic co-sponsor of legislation, Rep. Cox has lent his name to 1,988 pieces of legislation. Yet only 19 of them – 1 percent – have dealt with securities.
- Excluding legislation judged to be neutral, 69 percent of the securities-related legislation Cox has sponsored or co-sponsored has been against investor interests.
- Cox’s signature legislative achievement – his sponsorship of the Private Securities Litigation Reform Act of 1995 – made it substantially more difficult for investors to sue to recover losses due to fraud. Moreover, evidence is now emerging indicating that the act, ostensibly aimed at so-called frivolous lawsuits, is having the effect that critics feared: barring meritorious lawsuits in which investors are legitimately entitled to recover damages. The original version of the bill that Cox introduced would have provided even more avenues for companies to dodge liability for fraud.
- The other major securities-related bill Cox sponsored sought to interfere with the work of accounting standard-setters and to preserve a method of accounting widely criticized for its potential to be used to mislead investors and allow companies to paper over problems.
“It would be disastrous for investors if Rep. Cox were at the helm of the SEC,” said Claybrook. “His strongly anti-investor track record shows he has little interest in protecting the millions of Americans who are counting on securities investments for their retirement money. The Bush administration needs to select someone else.