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AmericasJuly 3 2005

SEC chair Cox is Republicans’ man of the moment

The republican chairman of the Senate Banking Committee, Richard Shelby, has thrown his support behind the new chairman of the US Securities and Exchange Commission (SEC), Christopher Cox. He also criticised former chair William Donaldson for failing to listen to his Republican peers.
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Mr Shelby said that Mr Cox, the conservative Republican congressman appointed by the Bush administration, who took over the post this month, may be the man for the moment. “Cox is intelligent. He has a broad background. And he will not ignore his two fellow Republican commissioners [on the five-member SEC Commission], the way Donaldson recently tended to do,” he said.

His comment was surprising in view of Mr Donaldson’s Republican status and his past links with the Bush family. But in his determination to stop corporate fraud and abuses in the mutual fund industry – and not to be outdone by Elliot Spitzer, the fiery New York Attorney General, in suppressing corporate misconduct – Mr Donaldson increasingly allied himself with the SEC’s two Democrat appointees to push through tough reforms.

In contrast, 52-year-old Mr Cox – who sponsored legislation in 1995 that makes it harder for investors to sue over corporate misconduct – is expected to ally himself with the SEC’s two Republican appointees and to ease business regulation.

Mr Shelby told The Banker that he had nothing but praise for 73-year-old Mr Donaldson during his early tenure at the agency in 2003. At the time, accounting scandals and fraud at Enron and other major US companies rocked US investor confidence and the SEC was widely criticised for failing in its oversight.

“Donaldson came to the SEC when it was rudderless. He helped immensely to bring integrity and leadership back to the agency,” Mr Shelby said.

Such partisan divisions could be addressed at hearings in Congress on the implementation of the 2002 Sarbanes-Oxley governance and accounting law later this summer, he said. “There will be an opportunity then to listen to the people affected by the new regulations, decide if the regulations are good for business, and make revisions if necessary.”

He said there was a consensus that Mr Cox must continue efforts started by Mr Donaldson to reduce the costs of compliance stemming from a section of the law that covered public companies’ internal financial controls.

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