SEC Chair Chris Cox is a friend of mine. He followed me in the Reagan White House Counsel’s office, and I was glad to support him through a long and distinguished career in the House. He was wrongly denied the opportunity to serve on the Ninth Circuit, and his appointment to be the Chair of the SEC was one of President Bush’s better second-term moves.
But Chairman Cox is siding with the plaintiffs’ bar on a case of huge importance, and why he is doing so boggles the mind. The Department of Justice rightly rejected –at least for the time being– the SEC’s 3 to 2 request that it intervene on the side of the plaintiffs’ bar in a SCOTUS case of great importance. Good. The Wall Street Journal reports on the case here (subscription required.) Key excerpt:
U.S. Solicitor General Paul Clement refrained from filing an amicus brief by a midnight deadline even though he had been asked to do so by the Securities and Exchange Commission. The SEC had voted 3-2 to recommend that the solicitor general advocate on behalf of investors in a case about whether third parties can be sued under federal securities laws for allegedly playing a role in another company’s accounting fraud.
A Justice Department spokesman would not say whether or when a brief would be filed.
The case has become a flashpoint in a larger debate over the Bush administration and its policies towards businesses. SEC Chairman Christopher Cox, a Republican who while in Congress sponsored legislation that restricted the ability of investors to sue for securities fraud, was subject to intense lobbying by plaintiffs’ attorney William Lerach. Mr. Cox ultimately broke ranks with fellow Republicans and voted to weigh in on behalf of investors.
Business groups, such as the U.S. Chamber of Commerce, have warned that allowing investors to sue third parties will make foreign companies think twice before doing business in the U.S.
If Chairman Cox would like to send along an explanation, I’d be happy to publish it here. LawBlog has more. No word yet from the Professor of the Vines whose opinion on such matters is usually dispositive. If there’s a case to be made for Chairman Cox’s POV, Professor Bainbridge will figure it out.