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Senate Banking Committee Holds Hearing on Pending SEC Nominees
Congressman Christopher Cox (R-CA), the nominee for
chairman of the SEC, said that if he is confirmed his top priorities will be the
vigorous enforcement of the securities laws, cultivating respect for the rule of
law in the capital markets, keeping pace with technology and ensuring continuity
in critical operations in the event of another terrorist attack. The Senate
Banking Committee questioned Cox and nominees Roel Campos and Annette Nazareth
on a variety issues. At the conclusion of the hearing, Chairman Richard Shelby
(R-AL) advised that he plans to hold another meeting on Thursday to confirm the
nominees.
In opening remarks, Senator Christopher Dodd (D-CT)
emphasized the importance of commissioners not getting embroiled in the
machinations of politics. Senators Barbara Boxer and Dianne Feinstein, both
Democrats of California, noted that the fact that they appeared in support of
Cox spoke to his abilities as a consensus builder. Charles Schumer (D-NY) was
pleased that Cox has said that he is not going to preside over a big roll-back
of initiatives the SEC has already undertaken.
Shelby
raised the issue of recent split votes at the Commission and asked Cox if such
votes undermine the SEC's credibility. Cox responded that a unanimous vote is
not always possible. By design, the Commission provides different points of
view, he added, since no more than three members can be from the same political
party. He assured the Committee members that he will seek a consensus at the
Commission.
Campos
, who was renominated for a full term after completing the term of a
predecessor, noted that reasonable minds can differ. The SEC has grappled with
tough issues, and he said he does not believe the split votes diluted the
Commission's credibility. The Supreme Court frequently splits votes, he added.
Nazareth
, currently the director of the SEC's Division of Market Regulation, agreed that
a consensus is desirable and that it would be her strong preference when voting
on SEC actions.
Shelby
asked Cox to discuss his views on stock option expensing. The process is going
forward, Cox said. The most important issue now is the clarity of the standard.
Cox said the independence of FASB is critical and he will build upon the record
that has already been established.
Cox explained his role in a lawsuit that named him after he
had been in Congress for 10 years that related to his private practice prior to
being elected to Congress. He was named in a class action lawsuit, but the court
dismissed the action against him. With respect to shareholder communications,
Cox said that shareholders are owners and their rights must be protected. He is
aware of the proxy access proposal that was not acted upon by the Commission and
said there is no reason that shareholder communications cannot be improved with
disclosure and technology.
Senator Paul Sarbanes (D-MD) noted that numerous comments greeted Cox's
nomination, including a presumption that there would be a diminution in
regulation and that the pendulum would swing back. Cox said he would bring a
nonpartisan spirit to the Commission. He assured the Committee that he will in
no way be lax in enforcing the securities laws or in pursuing necessary
regulation.
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