Confounding His Critics
GOP stalwart Cox sidesteps partisan labels as he settles in as the country's chief financial watchdog
The SEC chairman's involvement in the litigation issue raises hackles because of his personal history. In 1995, Cox was named in shareholder lawsuits against First Pension Corp. He had worked as a lawyer for the company as it sought to securitize mortgages for sale to investors. In one letter to the California Department of Corporations, the state's top regulator, Cox noted that the trust deeds were "relatively low risk" and "not only fair but advantageous to purchasers." The company later went bankrupt, and its founder, William E. Cooper, was convicted of defrauding investors of $130 million. Cox says he had no inkling of Cooper's criminal dealings.
Cox's concerns about America's litigious tendencies are probably about to take a back seat. Bigger worries are on the front burner. Overseas markets have grown rapidly over the past few decades, increasing Americans' appetite to invest in them. At the same time, the markets are consolidating, including the New York Stock Exchange's merger with Euronext. Foreign brokerages may start pitching directly to American investors.
All of this means Americans may soon have much greater opportunities to invest, and to invest more cheaply, but possibly at the cost of U.S. regulatory protections. Just how the SEC deals with this internationalization of markets will be the greatest test of Cox's approach to regulation. These are relatively uncharted waters, says Frankel, noting that the SEC must "establish when it can trust the market to self-regulate and where it should intervene to maintain market integrity and efficiency." She adds that "the line is never clear, especially when there are so many market changes."
Cox knows this is true. "There is no question where the market is headed. But securities regulations in the 21st century have to be sturdy enough to protect American investors and our markets, in the midst of truly international forces," he says. "Maintaining America's high standards in this era of global securities markets is one of our greatest challenges."
Born: Oct. 16, 1952
Family: Married, with three children
Education: B.A., University of Southern California; M.B.A. and J.D., Harvard
Public Service: Senior associate White House counsel, 1986-88; Republican congressman, 1988-2005; SEC chairman, 2005-present
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