Cox Quits at SEC, Leaves Schapiro to Restore Clout After Madoff

Cox Quits at SEC, Leaves Schapiro to Restore Clout After Madoff - 1/21/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Cox Quits at SEC, Leaves Schapiro to Restore Clout After Madoff
Jesse Westbrook

Bloomberg. January 21, 2009
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EXCERPT: Christopher Cox stepped down as U.S. Securities and Exchange Commission chairman, leaving behind a demoralized agency that failed to spot Bernard Madoff’s alleged fraud and had its role diminished by the collapse of Bear Stearns Cos. and Lehman Brothers Holdings Inc. His resignation took effect yesterday, agency spokesman John Nester said. During Cox’s 3 1/2-year tenure, the SEC has been criticized by lawmakers, investors and its own inspector general as lacking aggressiveness and being deferential to Wall Street banks. President Barack Obama, a Democrat, picked Mary Schapiro, the head of the U.S. brokerage industry’s self- regulator, to succeed the Republican Cox. “I respect Chris Cox, but there’s no question that the commission has been much too passive in area after area under his leadership,” said Harvey Goldschmid, a former Democratic SEC commissioner who remains in contact with agency employees. “The morale problems and the lack of public regard for the agency must be immediately addressed by Mary Schapiro,” said Goldschmid, a law professor at Columbia University in New York. […] Cox “came to the commission wanting to focus on bringing the SEC into the 21st century, making the U.S. more globally competitive by getting rid of burdensome regulations and making the agency more technologically sophisticated,” said Donald Langevoort, a former SEC attorney who teaches securities regulation at Georgetown University in Washington. “Like so many of his predecessors, that agenda ran up against unprecedented cataclysmic events.” Global stock markets began swooning in August 2007 after banks saddled with illiquid subprime-mortgage securities stopped lending to each other. A year later, with financial companies still facing asset writedowns, Cox banned short-selling of U.S. banks, insurers and securities firms. A short sale takes place when an investor borrows stock and sells it, aiming to profit by repaying the loan with shares bought at a lower price.

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