SEC's Senior Democrat to Leave As Vote on Investor Rights Nears
Friday, August 10, 2007
The senior Democrat at the Securities and Exchange Commission announced yesterday that he would depart for the private sector, raising questions about how the five-member agency would rule on enforcement cases and a key investor-rights plan.
Roel C. Campos, a former federal prosecutor, arrived at the nation's top securities overseer in 2002, as Congress was adopting legislation that increased prison sentences and stiffened financial penalties for errant company officials.
SEC Chairman Christopher Cox, in a statement announcing the departure, cited Campos's "exceptional devotion to raising investor protection standards around the globe."
Campos's announcement comes at an uncertain time for the SEC. The term of the agency's second Democratic commissioner, Annette Nazareth, quietly expired in June, and sources familiar with her plans said she hopes to leave by year-end. Nazareth, who can stay in her post for 18 months, did not return a call seeking a comment.
The SEC is made up of two Democrats, two Republicans, and the chairman, a former member of Congress who represents the president's political party. If an SEC vote ends in a tie, nothing happens with a proposal.
Campos regularly cast the third and deciding vote to impose multimillion-dollar fines against companies engaged in accounting manipulations and other wrongdoing. He traveled widely as an ambassador for the 2002 Sarbanes-Oxley corporate accountability law, opening lines of communication between regulators in the United States, Europe and Asia. And more recently, he has pushed for tough sanctions against companies and executives who run afoul of securities laws.
"He's been a great voice for investors, and he was a pivotal vote on almost every one of these issues," said James D. Cox, a Duke University law professor.
He also offered critical support for a plan that would give large investors more power to nominate corporate board members. The plan was submitted for public comment last month, after a bitterly divided 3 to 2 vote, and would give shareholders who hold at least 5 percent of a company's stock for one year or longer more leeway to name board members. The plan was criticized by industry groups, which argue that it would divert management attention and favor unions and other special interests. Industry groups favor a far more restrictive plan that the SEC also issued for public comment. The proxy access proposal's future is now up for grabs, advocates said yesterday.
The announcement by Campos, combined with the looming departure of longtime SEC corporation finance division official Martin P. Dunn for the law firm O'Melveny & Myers, raises serious and possibly insurmountable obstacles for the shareholder-rights plan, experts said.
Ann Yerger, executive director of the Council of Institutional Investors, which supports the broader shareholder proposal and represents many of the country's largest pension funds, said: "The timing from our perspective really couldn't be worse given the SEC is considering these access proposals."
"The prospects for proxy access being adopted before the 2008 proxy season are dim, to say the least," said John F. Olson, a corporate law partner at Gibson Dunn & Crutcher in the District.
Campos, the first Hispanic SEC commissioner, is expected to leave in September for a partnership at the District office of the law firm Cooley Godward Kronish, according to two sources familiar with his decision who spoke on condition of anonymity because his new employer had not yet been publicly named.
In an interview, Campos said he had promised his family that he would leave the agency for more lucrative pastures years ago. He stressed that retail investors, whose confidence in the stock markets was badly rocked by scandals at Enron and WorldCom little more than five years ago, will closely watch the SEC and how it polices corporate wrongdoing.
As for the proxy-access proposal, Campos said he hopes the agency will move ahead with a plan to give investors more rights rather than one that restricts them.
"I think Chairman Cox cares too much about investors and shareholder suffrage to not have a shareholder-proxy proposal that is positive," Campos said. "There are just as many Republican investors as there are Democratic investors."
Among the possible successors to Campos is Luis A. Aguilar Jr., a former SEC staff member and onetime general counsel at investment firm Invesco who practices corporate law at the McKenna Long & Aldridge firm in Atlanta. But some Democrats and shareholder advocates have raised concerns about public statements by Aguilar that question whether the costs of complying with the Sarbanes-Oxley law have been worth the benefits.