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.
"It's a significant step forward and hopefully it's not the last thing the commission will do to make it easier and less expensive for everybody to participate in the election process," said John F. Olson, a longtime securities lawyer at Gibson Dunn & Crutcher LLP.
The longest-awaited new plan from the agency is still weeks away. Cox has said he will launch a proposal requiring better disclosure of massive executive-compensation packages as early as January.
Agency insiders say Cox has spent much of his early tenure trying to plug a $48 million budget gap he inherited. He also has been using his political skills to try to calm the waters at an agency where internecine fighting had grown into almost a blood sport in Donaldson's waning days.
"It's essential to develop solid working relationships on the commission," Cox said in a brief telephone interview. "I think we will continue to get together formally and informally to that end."
In recent weeks, the five commissioners -- who spent much of last year as two warring factions -- have socialized outside of the office.
"He's taking a very measured, consensus-building approach," said SEC Commissioner Paul S. Atkins, who publicly clashed with the panel's former chairman.
Barbara Roper, director of investor protection for the Consumer Federation of America, said, "Letting the agency chill out isn't such a bad idea given the venomous acrimony of recent months."
Commissioners also have been meeting behind closed doors to develop an explicit policy on how and when companies should be forced to pay financial penalties. The penalty issue inspired a standoff, and several acrimonious 3 to 2 votes, under previous leadership. Settlements of a few enforcement cases have been delayed as result.
The SEC's single biggest enforcement case under Cox is a $72 million settlement reached by the SEC and New York Attorney General Eliot L. Spitzer with a mutual fund company Monday over trading abuses. Other cases have settled for far less money.
Cox, who kept speaking engagements to a minimum earlier this year, is beginning to hit the circuit. He is visiting the agency's satellite offices. And executives at the Business Roundtable, a trade group composed of the nation's largest companies, say Cox will appear at an off-the-record meeting in Washington next week.
Chairman Christopher Cox and the Securities and Exchange Commission propose allowing companies to conduct proxy solicitations over the Internet.