Monday, June 06, 2005

Caveat investor

Did he go or was he pushed is the question raised by William Donaldson's early departure and remarkably swift replacement as chairman of the US Securities and Exchange Commission? Either way, George W. Bush's election victory clearly presented big business with a prize opportunity to lobby for a rolling back the tide of securities legislation and corporate governance reform that started with the Sarbanes-Oxley act. Christopher Cox, the Republican congressman who now takes over at the SEC, looks the man to do it. Like Alan Greenspan, the Federal Reserve chairman, he is reported to be a devotee of Ayn Rand, novelist and enthusiast for ultra free markets.

The new incumbent is best known in this area for helping steer a bill through the House of Representatives to make it harder for investors to sue for misconduct. He has also opposed realistic accounting for stock options and mergers. With the terms of the two democrats on the five-seat Commission coming to an end as Christopher Cox takes over, this watchdog threatens to turn into a poodle. Alongside the Supreme Court's overturning of the Enron-related Andersen conviction, this suggests the start of a less shareholder friendly era.

See full Financial Times Article (paid subscription required).