O.C. meets SEC

The nomination of US congressman Christopher Cox as chairman of the
Securities and Exchange Commission could signal a new road ahead for financial
regulation.

The Orange County Republican, who has yet to be confirmed by the US Senate,
is staunchly pro-business and has used his 19 years in politics to campaign for
lower taxes, free enterprise and limited government.

His appointment comes during a pivotal period for the SEC, and indicates that
the era of tight financial regulation post-WorldCom and Enron may be drawing to
a close.

Cox will replace William Donaldson, former chair of the New York Stock
Exchange, whose mission during his two and a half years in charge of the SEC was
to clean up corporate US. He pushed through numerous regulations and expanded
the SEC’s staff by 1,200.

Donaldson’s record number of fines levied against business – £3.9bn – made
him unpopular and is thought to have prompted his shock resignation.

Industry is now looking to Cox, nominated by President Bush, to roll back
some of this regulation.

Cox is widely expected to issue a moratorium on any new rules to ease the
impact on business following the Sarbanes-Oxley Act 2002, but those expecting an
easy ride will be disappointed. The Harvard-educated finance lawyer has already
made it clear that markets need ‘clear and consistently enforced rules’.

Cox made his political debut working for former president Ronald Reagan in
1986 and has since made his mark as an Orange County congressman for 17 years.
He has been chairman of the select committee on homeland security, which
oversees policy on security and anti-terrorism, since 2003. But it is Cox’s
legislative activity that gives a real flavour of his fiscal beliefs, which
could soon filter into policy at the SEC.

According to Cox, more than 12 of his bills are now on the US statute books
including the Securities Litigation Reform Act – the only bill that saw congress
override then president Bill Clinton’s veto. The Act, which has been criticised
by shareholder groups, makes it difficult for investors to sue companies for
corporate fraud following share price volatility.

He has also worked to get ‘double tax’ on dividends repealed and has
introduced two tax simplification acts, one to create a simplified tax form for
pensioners earning him the mantle ‘super friend to the seniors’.

Cox, 52, also has a record for working with the opposition. In 1998, he
introduced a three-year moratorium on taxes and regulation of the internet with
the help of a Democrat senator from Oregon, Ron Wyden. This was made permanent
with an additional Act in 2003.

And he’s not afraid to criticise his own party, despite his track record as a
Republican loyalist. In a speech last year, his fiscal conservatism got the
better of his politics when he bemoaned the growing cost and size of Bush’s
government.

The appointment of Cox, it seems, will mean yet another new era for the
regulator of the world’s biggest financial market – and the rest of the world.