August 8, 2005

SEC Chair Cox Already Gives First Speech

Upon my return from vacation, I was surprised to see that new SEC Chair Chris Cox already had delivered his first speech – in the form of a welcoming statement to the SEC Staff.

In this Washington Post article, Chairman Cox’s speech was characterized as “gently chiding analysts and media reports that predicted he would take a less investor-friendly approach than Donaldson, who frequently cast his vote with the agency’s two Democrats to impose new regulations on industry.”

An interesting sidenote from the article was “The agency also faces an October deadline for naming a candidate to the Public Company Accounting Oversight Board. Kayla J. Gillan, a former lawyer at the California Public Employees’ Retirement System and a favorite of investor advocates, has expressed interest in being reappointed to her slot on the accounting board. In a telephone interview yesterday, Cox said he would be “careful and deliberate” about the appointment process. “It’s going to take a few weeks to determine an approach to those issues,” he said.” Looks like the PCAOB member appointment process could become a little dicey for SEC-PCAOB relations; the bond among the members of the PCAOB’s Board is quite strong even though they have differing backgrounds.

As a former Staffer, I can tell you that the mere fact that Cox addressed the SEC Staff early on in his tenure will boost employee morale; not that morale suffered under former Chair Donaldson. I don’t recall a new Chair addressing the Staff on his first day in office – and it definitely is the first address from a Chair to the Staff that was simultaneously webcast to the world.

[Beach note – my sole purchase during vaca was a T-Shirt that says “The Beatings Will Continue…Until Morale Improves.” My kids love it!]

Thomson Financial Buys LivEdgar

Recently, Thomson Financial continued its buying spree in the legal market by acquiring Global Information, which operates the popular LivEdgar service. Before the days of EDGAR, some of us will remember when the three founders of LivEdgar rode their bikes to pull copies of Schedule 13Ds from the SEC’s Public Reference Room. Those founders decided to stay on and are now Thomson Financial employees.

Registration Statement Review: Old School Style

For the first vacation in some time, I fended off the urge to work and didn’t check email, etc. Gotta do that more often. During the week, I read a fascinating biography of William Randolph Hearst called “The Chief” – and was intrigued about the description of how Hearst hired Joe Kennedy in 1936-37 (after Kennedy had served as the first SEC Chair) to help him reorganize his embattled media empire.

As part of Hearst’s bailout, Kennedy’s staff filed two registration statements to sell bonds which Time magazine called “two of the most remarkable registration statements ever filed” which were filled with “many a Hearst publishing secret, many a Hearst business oddity…”

The review process back then was to allow the public to file their own comments on registration statements (and the Commissioners themselves would review the disclosures themselves and issue comments!) – and apparently that was done in droves as Hearst was widely disliked at the time. Not only that, but Hearst never kept his personal funds separate from those of his various corporations and was a monumental spender. Today, he would be considered more of a crook than Bernie Ebbers – but commingling was fairly common in those days.

Although not entirely clear, “The Chief” intimates that the registration statements were amended to add disclosures based on public comments – and according to this information that I found on the Web when I got home, the registration statements were ultimately withdrawn (“The Chief” merely said there was a lack of investor interest in the bond offerings, but didn’t indicate whether the offerings were ever completed).

To learn more about the beginnings of the SEC, check out this interesting transcript from the SEC Historical Society about the legacy of the second SEC Chair, James Landis. Note that first Chair Joe Kennedy didn’t stay at the SEC for much more than a year, but his appointment was absolutely critical to help gain Wall Street acceptance of the notion of being regulated, as Kennedy was among the foremost movers and shakers on the Street before his appointment.