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SEC nominee to face scrutiny

Rep. Christopher Cox, R-Calif., thanks President Bush for naming him to succeed William Donaldson as chairman of the Securities and Exchange Commission, at the White House in Washington, on June 2. (Associated Press / The Spokesman-Review)
Associated Press
Rep. Christopher Cox, R-Calif., thanks President Bush for naming him to succeed William Donaldson as chairman of the Securities and Exchange Commission, at the White House in Washington, on June 2. (Associated Press / The Spokesman-Review)

WASHINGTON — President Bush’s choice to head the Securities and Exchange Commission, Rep. Christopher Cox, likely will be questioned at his confirmation hearing about his past work for a company accused by the government of defrauding investors, Senate aides said.

Cox, a California Republican and free-market conservative, was nominated by Bush last week following the surprise announcement by SEC Chairman William Donaldson that he is resigning at the end of the month. Business interests, which had chafed at Donaldson’s activist regulatory stance, welcomed Cox’s nomination. Investor advocates expressed concern.

He is expected to win Senate confirmation. The aides said Friday that the matter of Cox’s work as a securities lawyer in the 1980s for First Pension Corp. and its founder likely will be raised at the hearing next month by the Senate Banking Committee. They spoke on condition of anonymity because of the sensitive nature of the issue, confirming a report in Friday’s editions of The Wall Street Journal.

The SEC sued First Pension in 1994 for allegedly bilking investors out of hundreds of millions of dollars. Its founder, William Cooper, pleaded guilty to felony charges and received a prison sentence.

Cox has denied having any knowledge of wrongdoing by the company and its executives. He was removed as a defendant in a lawsuit by First Pension shareholders.

“This is a matter that concerns work Congressman Cox did in private practice decades ago,” White House spokeswoman Erin Healy said Friday. “It was fully looked into in court proceedings and Congressman Cox won the case. The court dismissed all causes of action against him.”

Senate Democrats, meanwhile, are pressing the White House to nominate two individuals, Annette Nazareth and Roel Campos, to fill the two anticipated Democratic vacancies on the five-member SEC. They are stopping short of threatening to block Cox’s nomination if the two aren’t named, however.

“We would like assurances from the White House that the administration will not delay the nominations of the two open Democratic slots on the commission,” said Bill Ghent, a spokesman for Sen. Thomas Carper, D-Del., a member of the Banking Committee.

Senate Democratic Leader Harry Reid of Nevada sent Bush a letter last month asking him to nominate Nazareth, the director of market regulation at the SEC, to fill one of the vacancies and to name Democratic Commissioner Campos to a second term.

By tradition, the White House often accepts recommendations for the Democratic seats from the Senate Democratic leadership.

Nazareth was the choice of Sen. Charles Schumer, D-N.Y., another member of the banking panel. She would replace Harvey Goldschmid, who plans to leave the SEC in the coming months to resume teaching law at Columbia University.