Cox’s SEC Hindered Probes, Slowed Cases, Shrank Fines, GAO Says

Cox’s SEC Hindered Probes, Slowed Cases, Shrank Fines, GAO Says - 5/6/2009

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2009 News and Press Releases

SEARCH

News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Cox’s SEC Hindered Probes, Slowed Cases, Shrank Fines, GAO Says
Jesse Westbrook and David Scheer

Bloomberg. May 6, 2009
_________________________________________________________________________

EXCERPT: The U.S. Securities and Exchange Commission was plagued by internal conflicts before the regulator drew fire for missing Bernard Madoff’s $65 billion Ponzi scheme, a U.S. government watchdog said. Under former SEC Chairman Christopher Cox, the agency instituted policies that slowed cases and led enforcement-unit lawyers to conclude commissioners opposed fining companies, the Government Accountability Office said in a report today. An unidentified attorney said it was “widely felt” commissioners prevented the division from “doing its job,” according to the report. “Some investigative attorneys came to see the commission as less of an ally in bringing enforcement actions and more of a barrier,” the GAO said. Cox’s policies “contributed to an adversarial relationship between enforcement and the commission.” The SEC failed to detect Madoff’s fraud, which dated to at least the 1980s. Mary Schapiro, who succeeded Cox in January, has tried to restore the SEC’s clout by replacing senior staff and reversing decisions made by her predecessor. “The report will help draw the curtain down on an era and investors are better off for it,” said James Cox, a law professor at Duke University in Durham, North Carolina, who isn’t related to the former SEC chairman. “Enforcement’s presentations to the commission had gotten brutal and a lot of pushback was occurring.” […] Cox, now 56, set up a procedure in 2007 that required enforcement attorneys to seek approval from commissioners before negotiating corporate penalties. Previously, SEC investigators could enter into settlement talks without obtaining permission. “The pilot program was designed to test ways to speed up cases and improve oversight, and was tried in only nine of more than 1,000 cases that were all approved by the commission,” Cox wrote yesterday in an e-mailed statement. “The GAO analysis supports the chairman’s decision to end the pilot and pursue other approaches.”

Back to News page | Back to Archived News 2009 page | Back to Top

�