Cox Takes First Steps at SEC

Chairman Moves Cautiously in Face of Management Hurdles

Since he was sworn in as chairman of the Securities and Exchange Commission Aug. 3, former representative Christopher Cox has moved cautiously and mostly behind the scenes at an agency that had been active but acrimonious under its previous leadership.

Yesterday, the SEC voted unanimously to propose allowing companies to issue proxy statements on the Internet -- not a blockbuster, but a move that blended two of the new chairman's central interests.

Nearly four months into his term, the Republican onetime congressman from Orange County, Calif., reserves some of his most passionate remarks for the subject of how computers can help shareholders access information quicker and more cheaply.

But investor advocates and business groups say they are far more interested in how Cox will grapple with management challenges in the months ahead. Chief among them: filling high-level vacancies in the agency's key divisions and at the Public Company Accounting Oversight Board, which reviews the work of audit firms.

The board stands at the center of vocal complaints from industry groups over a measure requiring companies to assess the effectiveness of their financial controls. Small businesses in particular complain that the rule is cumbersome and expensive. At Cox's first public meeting as the agency's chairman in September, the SEC voted to grant small companies a delay in following the control rule. More action is likely next year, after the SEC receives fresh recommendations from an advisory group.

Important to any tweaks will be the replacement for oversight board Chairman William J. McDonough, a former president of the Federal Reserve Bank of New York who leaves his post today. Cox has said he will appoint an interim leader while the agency develops and vets a short list of candidates for the permanent slot. The process, which involves background checks, could take months.

Meanwhile, the term of accounting board member Kayla J. Gillan expired in October. Gillan, a former general counsel at the California Public Employees' Retirement System, continues to serve on the panel. She has expressed interest in being reappointed.

Separately, several top staffers have left the SEC in recent months, leading to some logjams in proposing initiatives. Interim leaders are in place at the investment-management unit, which monitors the mutual fund sector, and at the market-regulation unit, which oversees the New York Stock Exchange and the Nasdaq Stock Market. A deputy also serves as temporary chief accountant, a key policymaking role. The vacancies offer Cox a chance to put his own stamp on the agency. Insiders say even more departures are likely to come before year-end.

Cox told reporters yesterday that filling those jobs is "at the top of my priority list." He declined to provide a timetable for the selections, saying nationwide searches were underway.

To date, the Consumer Federation of America and the AFL-CIO, which were wary of his appointment, mostly give Cox credit for what he hasn't done -- namely, rolling back the controversial initiatives of his predecessor, William H. Donaldson. Despite industry backlash, Cox has not renounced rules mandating that mutual fund boards have chairmen independent of management nor a plan to require hedge funds to register with the agency.

Meantime, Cox's go-slow approach to new rules is fine with the U.S. Chamber of Commerce. David Hirschmann, a senior vice president at the chamber, said Cox is "taking a more studious approach to regulation than his predecessor. We should let some of the regulations play out before we pass new ones."

The online-proxy-statement proposal released for public comment yesterday could take effect in 2007. The commission approved moving forward on the proposal, which could save businesses hundreds of millions of dollars in printing and postage costs, by a unanimous vote. The idea drew praise from the Securities Industry Association, among others.