Wall Street Firm Asked SEC to Intervene Against Defrauded Enron Investors
Santa Monica, CA — Details of possible meetings and secret correspondence between Securities and Exchange Commission (SEC) Chairman Christopher Cox and Enron banker Merrill Lynch, a client of Cox’s former law firm, Latham & Watkins, were demanded in a Freedom of Information Act (FOIA) request submitted today by the Foundation for Taxpayer and Consumer Rights (FTCR).
Merrill Lynch reportedly asked the SEC to weigh in on its behalf against Enron shareholders in litigation holding the company accountable for its complicity in the Enron fraud. The FOIA request demands information on any meetings or communications between Cox or SEC General Counsel Brian Cartwright and Merrill concerning the litigation, and whether either man recused himself from discussions. The intentions of the SEC, and the involvement of Cox or Cartwright, have not been made public.
Cox and Cartwright, who moved to the SEC from Latham & Watkins last year, should not have been involved in discussions with Merrill Lynch due to their former firm’s close relationship with the company, according to FTCR.
“The nation’s top securities cop should be cracking the whip against corporate fraud and Enron conspirators, not meeting secretly with a former client and trying to slip one by American investors,” said Carmen Balber, consumer advocate with FTCR.
The SEC under Cox has moved to weaken a series of post-Enron corporate reforms, including a sudden rule change last month that would cause identical executive compensation packages to be disclosed very differently, and a proposal that would allow less stringent audits of companies’ financial reporting.
“The Commission’s recent moves to weaken corporate governance rules raise further concerns that the Cox SEC is abandoning its mandate to be an investor advocate,” said Balber.
Enron shareholders were joined by the attorneys general of 30 states in their suit charging several investment banks, including Merrill Lynch, with complicity the Enron scandal.
Cox was appointed Chair of the SEC in 2005 amid allegations that his deregulatory agenda as a private attorney and Congressman would prevent him from being an investor advocate. As a Congressman, Cox sponsored the Private Securities Litigation Reform Act, which made it harder for investors to sue and recover losses due to fraud. His confirmation to the commission was marred by questions about his involvement in an investor scam that cost retirees and other small investors over $130 million during his tenure at Latham and Watkins.