Cox Has Neutered SEC's Watchdog Role

Critics say agency has gotten soft, especially against big business
By Harry Kimball,  Newser Staff
Posted Sep 17, 2008 4:37 PM CDT
"It was like someone poured molasses on the enforcement division,%u201D a former official in the division says of Christopher Cox's effect at the Securities and Exchange Commission.   (AP Photo)
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(Newser) – Under chairman Christopher Cox, the US Securities and Exchange Commission has drastically reduced the power of its enforcement division, Portfolio reports. Cox was brought in to “chill it out” after his predecessor was perhaps too zealous for White House tastes. Congress chided Cox for essentially turning down more funding, and penalties against offenders last year were a third of those in 2005, when Cox took office.

In addition, the enforcement arm has been focusing on smaller offenders, a tactic one former commissioner said was akin to New York’s “broken windows” policy. “You have to concentrate on the muggings and graffiti because that builds up respect for the rule of law,” he said. A former employee had a different view. “It was like someone poured molasses on the enforcement division.”