The following commentary was broadcast on Friday, July 22nd on Marketplace (national public radio) – You can also listen to it here.
DAVID BROWN, anchor: President Bush today nominated two Democrats to serve on the Securities and Exchange Commission. Nothing too surprising there. One is actually a re-nomination. The other occupies a top post in the SEC. The Senate Banking Committee takes them up next Tuesday. They will also consider President Bush‘s nomination of a Republican congressman from California to head the organization. Consumer activist and commentator Jamie Court argues when it comes to that lawmaker, Christopher Cox, Congress ought to be asking some tough questions..
JAMIE COURT, commentator: Never mind that Cox has one of the worst anti-consumer records as a Congressman on Capitol Hill.
Put out of your mind that back in 1995, Cox co-authored the law that limited CEO accountability for stock fraud.
Here’s the big problem: what Cox did as a private attorney two decades ago.
That’s when he represented William Cooper and his company First Pension Corporation. Cooper was later convicted of investment fraud.
Sure, lawyers do lots of things to defend all sorts of clients. But the American Bar Association and the California Bar have rules that lawyers cannot make misrepresentations to regulators.
According to the LA Times, that’s what it looks like Cox did.
Here’s what they reported. Small investors lost as much as 130 million bucks in the fraud and Cox helped Cooper and his company slip shady financial products by regulators.
How? Well, Cox wrote a letter to California State regulators. In it, he misrepresented a complicated high-risk real estate scheme Cooper was selling as a low risk investment.
Cox also left out of the letter the fact that the California real estate department had suspended Cooper’s real estate license for alleged fraud. And that the S-E-C was already investigating Cooper’s First Pension Corporation.
Anyone Congress considers as head of the chief law enforcement agency for investment houses shouldn’t have ever bent legal canons for a client, let alone for a swindler.
Cox maintains that he didn’t know then that Cooper was a fraud. But investors sued Cox and his law firm. Cooper went to jail. Cox went to Congress. Cox’s law firm settled for an undisclosed amount.
Congress ought to subpoena Cooper and Cox’s billing records to find out what Cox really did or didn’t do for Cooper.
Even politicians on Capitol Hill ought to agree that Wall Street’s top cop should be an impartial watchdog for investors not a lap dog for a convicted swindler. Shouldn’t they?