Hi folks. We have so many battles to fight right now - uncovering the strands of RoveGate, pealing the John Roberts onion. Our hands are full. But I submit to you another nomination by this administration, which is slipping under everyone's radar. We
need your help in opposing the nomination of Congressman Chris Cox as the Chairman of Securities and Exchange Commission ("SEC"). Here are
our reasons , which I am going to post and and expand on below the fold. Our calling targets are the Senators of the U.S. Senate Committee on Banking, Housing, and Urban Affairs ("Senate Banking Committee").
PLEASE CALL ALL OF THEM today and tomorrow, urge them to stop/oppose the Chris Cox nomination. Details after the fold. Please make the calls today. Again thanks so much for all of your support for Common Cause here at this wonderful community.
Here are the phone numbers of the members of the Senate Banking Committee:
Majority Members (Republicans)Member Name DC Office Phone Nos.- Richard C. Shelby (R-AL) [Chairman] 202-224-5744
- Robert F. Bennett (R-UT) 202-224-5444
- Wayne Allard (R-CO) 202-224-5941
- Michael Enzi (R-WY) 202-224-3424
- Chuck Hagel (R-NE) 202-224-4224
- Rick Santorum (R-PA) 202-224-6324
- Jim Bunning (R-KY) 202-224-4343
- Mike Crapo (R-ID) 202-224-6142
- John Sununu (R-NH) 202-224-2841
- Elizabeth Dole (R-NC) 202-224-6342
- Mel Martinez (R-FL) 202-224-3041
Minority Members (Democrats)
Member Name DC Office Phone Nos.
- Paul S. Sarbanes (D-MD) [Ranking Member] 202-224-4524
- Christopher J. Dodd (D-CT) 202-224-2823
- Tim Johnson (D-SD) 202-224-5842
- Jack Reed (D-RI) 202-224-4642
- Charles Schumer (D-NY) 202-224-6542
- Evan Bayh (D-IN) 202-224-5623
- Thomas R. Carper (D-DE) 202-224-2441
- Debbie A. Stabenow (D-MI) 202-224-4822
- Jon S. Corzine (D-NJ) 202-224-4744
Right now,we have some serious questions about Rep. Cox's ability to protect the public. We have reservations based on a number of reasons (Click "here" to read about our reservations concerning Rep. Cox's nomination to the SEC). The timing is crucial now because tomorrow (Tuesday) the Senate Banking Committee members will be reviewing Congressman Cox's record to determine whether or not he is a good choice to serve as the chair of the SEC.
Here are the key reasons, why we have so many reservations and questions about the Cox Nomination.
First, Congressman Chris Cox championed an amendment to the 1995 Private Securities Litigation Reform Act that would have made it almost impossible for investors who had been recklessly defrauded by corporate executives to get their money back. His bill would have shielded companies like Enron and their accountants, such as Arthur Andersen, from investor lawsuits. Judd Legum of ThinkProgress, recently penned an article in the Salon, "the Cox guarding the henhouse," which elaborated more on what he call's Cox's "signature achicement" during his 17 years in Congress:
Co-sponsored by Cox and Sen. Chris Dodd, D-Conn., the Private Securities Litigation Reform Act was a central plank of the Republicans' "Contract With America," and was ostensibly aimed at discouraging frivolous lawsuits by investors. But the law provides considerable legal protections for corporate executives -- and, just as important, their accountants and lawyers -- who mislead investors. For example, the law provides a "safe harbor" for executives who make inaccurate "forward-looking statements" about their company's future prospects. Securities lawyers refer to this provision as "the license to lie."
Under the PSLRA (which became law over President Clinton's veto), before a court can even accept a corporate fraud case, investors must prove there is a "strong inference" that the corporate defendant acted with the specific intent to "deceive, manipulate or defraud." This is a very tough standard to meet. The 7th Circuit Court of Appeals, interpreting the PSLRA, dismissed fraud cases against corporate executives who said they simply forgot to disclose damaging information to investors. (Cox favored an even more severe version of the law that would have shielded corporations from lawsuits in nearly every circumstance.)
But describing Cox as a principal author of the bill doesn't do justice to his significant role in its enactment. Cox was a PSLRA evangelist, and he sought to demonize his opposition. During a congressional hearing on the bill on Jan. 19, 1995, Cox described lawsuits by investors for securities fraud as "a scandal of corruption on a scale Congress hasn't witnessed since the days of Eliot Ness and Al Capone." These lawsuits, in Cox's view, were nothing more than an "extortion racket."
Make sure you read the whole piece.
Secondly, we also have questions about Rep. Cox's role as an attorney representing clients who went to prison for defrauding investors for millions of dollars. (Michel Hiltzik,
Cox's Past Ties to Con Man Raise Questions,
L.A. Times, June 9, 2005). Judd zeroed in on this as well: :
Cox's trouble started while he was practicing as an attorney for the firm of Latham & Watkins in the mid-'80s. In 1985, Cox wrote a letter on behalf of a client, First Pension Corp., to California securities regulators, assuring them that a new investment scheme dreamed up by First Pension CEO William Cooper was "low risk" and designed to be "fair, just and equitable" to investors. (Cox left out of the letter that Cooper was then under investigation by the SEC and had had his real-estate license suspended in connection with fraud at another company.) In fact, the investment Cox touted was a scam that defrauded small investors out of $130 million. Los Angeles Times columnist Michael Hiltzik described it as "one of the most flagrant con schemes in Orange County history."
Just one week before the PSLRA bill was introduced, attorneys representing First Pension investors were threatening to add Cox as a defendant in their suit. The Associated Press noted that although the PSLRA would not directly affect the First Pension case because it was filed in state court, "it could affect future legal actions brought in federal court against him or his former law firm, Latham & Watkins." But despite the apparent conflict of interest, Cox continued advocating for the bill, even after he was formally added as a defendant.
Spokespersons for Cox are quick to point out that Cox was eventually dropped as a defendant. But according to Michael Aguirre, who represented several hundred First Pension investors in the case, Latham & Watkins bailed out Cox. Aguirre, who is now San Diego's city attorney, told the Los Angeles Times "that in return for dropping Cox from the case he secured an agreement that Cox's actions could be imputed to Latham [& Watkins] in assessing its legal liability." Aguirre eventually reached a settlement with Latham & Watkins; the terms are secret. Cooper and a couple of his associates went to prison.
Sure doesn't sound like the kind of nominee we can entrust with the responsibility of serving as the nation's chief protector of the rights of investors and corporate employees.
Third, given the huge campaign contributions Rep. Cox has previously received from the financial industry, we think he has a serious conflict of interest: Will he serve as the protector of rights of investors and corporate employees or will he be beholden to those who financed his campaigns? Specifically, since 1989, his campaigns have raised more than $2 million from business political action committees. (Stephen Labaton,
Bush S.E.C. Pick Is Seen as Friend to Corporations,
N.Y. Times, June 2, 2005) The list of top 20 industries contributing to his campaigns includes securities and investment firms, which have given him over $256,000; law firms, which have given him $364,000; and accounting firms, which have given him over $207,000.
For these reasons, we urge you to call the members of the Senate Banking Committee today and urge them to oppose the Cox Nomination today. Again, someone who is tyring to get confirmed as the nation's chief securities law enforcement officer, should have a demonstrated commitment to the rights of investors. Rep. Cox's history in Congress and as a private attorney raises red flags that the Senate should not ignore. So, please call the members of the Senate Banking Committee today and let them know that you oppose Rep. Chris Cox's nomination.So, please place these calls today, and let us know how your calls are going by posting your comments right here. Thank you!
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