SEC Cox Says Commisson To Study Disclosure Overhaul
Professor Joseph A. Grundfest is quoted in a Barron's story about a speech SEC Chairman Christopher Cox gave at Stanford Law School's Directors' College:
The Securities and Exchange Commission is launching a project to consider the complete overhaul of the scores of forms used to meet the commission’s disclosure requirements, SEC Chairman Christopher Cox noted in a speech tonight at Stanford University’s law school.
Cox, who made his remarks at the Stanford Directors’ College, an annual symposium on corporate governance, said the agency is launching a project called “the 21st Century Disclosure Initiative” to consider how to “blow up” the current forms, many of which date back to the creation of the commission 75 years ago. The goal of the project is to come up with a blueprint by the end of the year “for overhauling the SEC’s current form-based structure with one that truly meets users needs.”
One odd thing about the talk tonight was that it came on a day when a story highly critical of Cox’s role in the recent Bear Stearns financial crisis appeared on the front page of the Wall Street Journal. Cox was able to dodge much discussion of the story, thanks to a rousing defense of Cox a few minutes before his talk from Stanford law professor Joseph Grundfest, a former SEC commissioner who runs the Directors’ College.
Grundfest asserted that the premise of the WSJ story was off base - that Cox did exactly the right thing by taking a hands off approach and allowing the Federal Reserve and the Treasury take the lead. Grundfest notes that investors in Bear Stearns’ securities did far better than those who hold debt or equity in a typical bank collapse; he says bond holders “made out like bandits” while stock holders at least got something, rather than the zero received in a typical bank seizure. Grundfest says Cox’s role as supervisor of the financial markets means some would have viewed greater involvement as “a massive conflict of interest…it does not take a rocket scientist to figure out that if the chairman of the SEC was involved in a transactions that dealt those cards to an SEC-regulated entity that charges of favoritism and unfairness would have been trumped up…the rational thing for the chairman to do was to stay away from it, and let other people drive that bus.”