Indeed, Cox will be very sympathetic to the argument that the post-Enron Sarbanes-Oxley era is chock-full of regulatory overkill, the kind that has lowered the animal spirits of entrepreneurship and risk-taking. It is doubtful, for example, that Cox will be tolerant of out-of-pocket fines for corporate directors who have no knowledge of company misdeeds. He is more likely to focus on the miscreant behavior of individual corporate wrongdoers than bring down entire companies (as was the case with Arthur Anderson). He is also likely to make it easier for foreign-domiciled businesses to register in the U.S.
Outgoing SEC chairman Bill Donaldson generally voted with the commission?s two Democrats and their frequent attempts to hogtie and re-regulate American business. He often followed the overzealous regulatory instincts of the SEC staff bureaucracy while opposing Republicans Paul Atkins and Cynthia Glassman. The free-market Atkins may provide a window into the thinking of the free-market Cox. Three-to-two votes henceforth are likely to favor the Republicans on the five-member commission, much to the benefit of economic growth and job creation.
This isn?t about politics as much as it?s about what works for growth-minded capitalist societies. Cox, importantly, learned his economics from supply-side guru Arthur Laffer. The two are close personal friends. Not surprisingly, the pro-growth Cox is a flat-tax reformer who favors the elimination of taxes on capital gains, dividends, and estates. As he?s a budget reformer in the House, it would not be surprising to see Cox exercise considerable new discipline with SEC staffing and expenses.
Chris Cox?s keen intellect and free-market viewpoint will provide a breath of fresh air at the Securities Exchange Commission. The rule of law, corporate accountability, and financial transparency are all key factors in the smooth and efficient workings of financial markets and corporate America. But business people both large and small complain that the overly harsh implementation of the Sarbanes-Oxley legislation is a heavy burden.
Rodgin Cohen, chairman of the estimable New York law firm Sullivan & Cromwell, complained recently that ?Sarbox? has become a ?metaphor for a regulatory system that is overly intrusive and legally imperialistic.? He is not alone: U.S. Chamber of Commerce president Tom Donahue has echoed this thought.
As chair of the SEC, Chris Cox can be expected to create a better balance between regulatory burdens and economic growth opportunities. He is not one to throw the baby out with the bathwater.