WASHINGTON – Rep. Christopher Cox (search), a free-market proponent chosen by President Bush to head the Securities and Exchange Commission, told Congress Tuesday he would oversee vigorous enforcement of securities laws.
The California Republican, who is expected to win Senate approval, walked a delicate line at his confirmation hearing before the Senate Banking Committee, stressing the importance of protecting investors while remaining neutral on controversial regulatory issues.
With some investor advocates and union leaders urging senators to reject him, Cox said people shouldn't assume that he would allow enforcement by the SEC to slacken.
No amount of regulation can prevent all fraud, but "there's a great deal the government can do" to deter and punish wrongdoing, Cox testified.
He indicated that he could use the bully pulpit of the SEC chairmanship to stress the importance of business ethics and values.
"My top priority will be vigorous enforcement of our securities laws," Cox told the committee.
Bush last month picked Cox to lead the SEC after the surprise resignation of Chairman William Donaldson (search), whom Bush had installed to help restore confidence in a stock market shaken by corporate scandals in 2002. Business interests, which had chafed at Donaldson's regulatory activism and pressed the White House to replace him with someone friendlier to them, have welcomed Cox's nomination.
Cox said he hoped to build on Donaldson's record, which he termed one of "great achievement."
Cox, 52, now chairman of the House Homeland Security Committee, is a former corporate lawyer who has been in Congress for 16 years.
"Hopefully we can get you to work as soon as possible," Sen. Richard Shelby, R-Ala., the Banking Committee's chairman, said in reference to all three nominees.
Senate Democrats had insisted that the two nominations for SEC commissioner be packaged with that of Cox. Bush named Nazareth, director of market regulation at the SEC, to replace Commissioner Harvey Goldschmid (search), who plans to leave soon to resume teaching law at Columbia University. Campos was nominated for a second term.
The five commissioners have split in an unusual alignment over several key issues, with Bush appointee Donaldson often siding with Campos and Goldschmid against his two fellow Republicans, Paul Atkins (search) and Cynthia Glassman (search). Cox is widely expected to take positions more closely aligned with Atkins and Glassman.
"I will undertake ... to do my level best to seek the common ground," Cox said when questioned on the matter at the hearing.
Campos, however, said that while consensus may be desirable, "reasonable minds will differ."
In the House, Cox wrote legislation that made it easier for companies to defend against some types of lawsuits by shareholders.
He is the first member of Congress to be nominated to head the 70-year-old agency. That would put him, if confirmed, in the unusual position of potentially regulating companies that donated money to his campaigns.
Cox was asked at the hearing about his work as a securities lawyer in the 1980s for First Pension Corp., a company that the SEC accused in 1994 of defrauding investors. He denied having any knowledge of wrongdoing by the company and its executives.