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Speechwriting, White House Office of
Currin, John
Location or
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OA Number:
Stack: Row: Sect.: Shelf: Pos.:
Hollinger ID:
W
17
2
7
3
3370
16305
5242
5407
Folder Title:
SEC Cox, June 2005
Withdrawn/Redacted Material
The George W. Bush Library
DOCUMENT FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
NO.
001
Webpage
Biography Resource Center [page 1]
1
06/01/2005
P6/b6;
002
Speech
Speech by SEC Chairman: Remarks Before the
8
05/27/2005
P5;
Foundation
003
Speech
Nomination of SEC Chairman
3
06/02/2005 P5; P6/b6;
004
Webpage
Congress, White House Await His Explosive [page 3]
1
06/01/2005
P6/b6;
COLLECTION TITLE:
Speechwriting, White House Office of
SERIES:
Currin, John
FOLDER TITLE:
SEC Cox, June 2005
FRC ID:
3370
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Freedom of Information Act - [5 U.S.C. 552(b)]
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b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
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purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
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Christopher Cox
Also known as: Christopher Cox
Birth:
(b)(6)
in St. Paul, Minnesota, United States
Occupation: Congressman
Source: Marquis Who's Who TM. Marquis Who's Who, 2004.
Source Citation
Family: S. Charles C. and Marilyn A. (Miller) C.; m. Rebecca Gernhardt; children:
Charles, Kathryn, Kevin. Education: BA, U. So. Calif., 1973; MBA, JD, Harvard U., 19
Certification: Bar: Calif. 1978, D.C. 1980. Polltical/Religious Affiliations: Republica
Addresses: Office, US Ho Reps, 2402 Raybum Ho Office Bldg, Washington, DC, 205
Address unknown, 1 Newport Place Dr Ste 420, Newport Beach, CA, 92660-2412.
Positions Heid: mem., Bipartisan Commn. on Entitlement and Tax Reform, Washingt
1994; chmn. house policy com., homeland sec. com.; mem. fin. SVCS. com.; mem. enei
and commerce com., steering com.; mem., U.S. Congresses from 48th dist. Calif.
(formerly 47th), Washington, 1989; sr. assoc. counsel to the Pres., The White House,
Washington, 1986-88; ptnr., Latham & Watkins, Newport Beach, Calif., 1984-86; lectr.
bus. adminstrn., Harvard U., 1982-83; assoc., Latham & Watkins, Newport Beach, Cali
1978-82; law clk. to judge, U.S. Ct. Appeals (9th cir.), 1977-78. Career-Related: prin.,
founder Context Corp., St. Paul, 1984-88.
Editor Harvard Law Rev., 1975-77.
This individual's biographical profile has been published in the following Marquis
publications: Who's Who in America , 57th edition
Who's Who in America , 56th edition
Who's Who in America ®, 55th edition
Who's Who in America , 54th edition
Who's Who in America , 53rd edition
Who's Who in America , 52nd edition
Who's Who in America ', 51st edition
Who's Who in America , 50th edition
Who's Who in America Q, 49th edition
http://galenet.galegroup.com/servlet/BioRC?vrsn=149&OP-contains&cloclD-execoffice&sr. 6/1/2005
Biography Resource Center -- Marquis Biography Display
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Who's Who in America R, 48th edition
Who's Who in America ®, 47th edition
Who's Who in America R, 46th edition
Who's Who in American Law ®, 5th edition
Who's Who in the West ®, 30th edition
Who's Who in the West 29th edition
Who's Who in the West ®, 28th edition
Who's Who in the West , 27th edition
Who's Who in the West ®, 26th edition
Who's Who in the West R, 25th edition
Who's Who in the West R, 24th edition
Who's Who in the West ®, 23rd edition
Who's Who in the West ®, 22nd edition
Who's Who of Emerging Leaders in America ®, 3rd edition
Who's Who of Emerging Leaders in America ®, 2nd edition
Copyright (c) 2004 REED ELSEVIER INC. ALL RIGHTS RESERVED. Published by
Marquis Who's Who.
SOURCE CITATION
"Christopher Cox." Marquis Who's Who TM Marquis Who's Who, 2004.
Reproduced in Biography Resource Center. Farmington Hills, Mich.: Thomson Gale.
2005. http://galenet.galegroup.com/servlet/BioRC
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COLLECTION:
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SERIES:
Currin, John
FOLDER TITLE:
SEC Cox, June 2005
FRC ID:
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2014-0564-F
OA Num.:
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NARA Num.:
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RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 6/26/2015
by erl
SEC Speech: 2005 CFA Institute Annual Conference: May 8, 2005 (Chairman William H Page 1 of 6
EXCHANGE ONE COMMISSION
Home I Previous Page
U.S. Securities and Exchange Commission
MCMXXXIV
Speech by SEC Chairman:
2005 CFA Institute Annual Conference
by
William H. Donaldson
Chairman
U.S. Securities and Exchange Commission
Philadelphia, Pennsylvania
May 8, 2005
Thanks, Jeff, for that generous introduction, and for inviting me to join you
tonight. I am honored to be hosted by the CFA Institute and to have this
opportunity to discuss some of the issues facing the analyst profession.
I know the evolution of this institute has a long history. Contrary to what
some might think, I was not present at its creation way back in 1925. But
soon after my partners and I at Donaldson, Lufkin & Jenrette opened our
firm, in 1959, we decided to pursue the coursework associated with
becoming a CFA, because we recognized the value in seeking to turn the
occupation of security analysis from a trade into a profession. And since
then I have seen you grow into a highly-respected and multi-faceted
organization, serving thousands of investment professionals throughout the
United States and the world. I applaud your dedication to education and
excellence, and to advancing thought leadership on the critical issues facing
the investment community. Your motto -- "setting the global standard for
investment professionals" - truly defines a laudable goal.
As you all know, the past few years have been extremely busy for the SEC.
I could certainly give a speech this evening that touches on all the different
issues we've tackled, ranging from the Sarbanes-Oxley mandates and
corporate governance, to mutual funds, hedge fund advisers, and equity
market structure, to name just a few. In a few minutes, I'd be happy to
take your questions, or respond to your thoughts on any of these issues,
but before I do I'd like to focus on a number of issues related to investment
research and the analyst profession. Before going any further, let me issue
the standard mandatory disclaimer that my remarks here are my own and
do not necessarily represent the views of the Commission or its staff.
I take special pleasure in joining you here tonight, because I spent many
years immersed in the world of investment research and analysis. At DLJ
we placed a premium on producing in-depth, comprehensive research
analyzing public companies. In particular, back in the early 1960s we saw
that the emerging growth of mutual funds and increasing equity orientation
of pension and other institutional funds was creating a new breed of
http://www.sec.gov/news/speech/spch050805whd.htm
5/27/2005
SEC Speech: 2005 CFA Institute Annual Conference: May 8, 2005 (Chairman William H Page 2 of 6
professional investors. These investors were faced with escalating demands
for performance and were inadequately served by so-called "research,"
which was then really only statistical reporting, designed for individual
investors. Institutions at the time were crowded into a relatively small
universe of household names, such as "the generals" - General Electric,
General Foods, General Motors, and the like - which soon became the "nifty
fifty" with PE valuations that far exceeded realistic prospects for growth.
That left many other companies, who were leaders in their fields - such as
Dun & Bradstreet, Diebold, A.C. Nielsen - or fledgling companies in new
industries - süch as Xerox - as wallflowers. The institutions did not have
the courage to move away from the big names because they did not have
the research base to truly understand the fundamental position or future of
these smaller companies. My colleagues and I set out to analyze them in a
comprehensive manner, akin to the work usually associated with the
management consulting profession. We recognized that buy-side clients
would reward us with commission business in exchange for sound, long-
term in-depth investment analysis. The market seemed to recognize the
value of the product we were offering, and happily we were able to make a
living off of it.
Today, research and analysis remains as important as ever, though much
has changed in the business over the past 45 years. As you know, when
brokerage commissions were deregulated in 1975 a new set of pressures
beset the business model of the sell-side analyst. As competition squeezed
brokerage commissions ever tighter, and with the development of the
efficient capital markets theories and a resulting emphasis on passive index
funds, many sell-side firms began demanding that their analysts prove their
worth in new ways. Over time, analysts responded to these pressures in
ways that I believe had a fundamentally negative impact on their ability to
think and write for the long term. Some analysts believed that in order to
survive they needed to cast their lot with the investment bankers. Research
became more like the statistical reporting that prevailed in the 1950s and
'60s and earlier, and there was little or no analysis of what made a
company tick. As standards slipped, it became easier to understand the old
Wall Street maxim that "you start as an analyst but you end as an
ambassador." The Wall Street Journal noted recently that at the height of
the boom in 2000 - and just before the markets started to tumble - 95
percent of the stocks in the S&P 500 had no sell ratings at all, and not a
single S&P 500 stock had more than one sell rating.
Part and parcel of this unrelenting optimism was a culture that perhaps
even encouraged analysts to cut a number of professional corners. To cite
just two of many examples, untested - and unreliable - valuation methods
became de rigueur, and income statements took precedence over balance
sheets. One research analyst captured the boom-years zeitgeist when he
told a magazine reporter that there was nothing wrong with his helping to
sell investment-banking services to corporate America: "What used to be a
conflict," he said, "is now a synergy.
As the structures supporting the analyst profession changed, so did the
information upon which it rested. Data which was once available to a
privileged few, and was difficult to obtain, became available to anyone with
an Internet connection. But this transparency, and "information
proliferation," did not necessarily translate into better analysis. Indeed,
there's probably more unreliable information - masquerading as "analysis"
http://www.sec.gov/news/speech/spch050805whd.html
5/27/2005
SEC Speech: 2005 CFA Institute Annual Conference: May 8, 2005 (Chairman William H Page 3 of 6
- floating around today than ever before.
This is where all of you come in. As chartered investment research
professionals, you are charged with producing unbiased research about the
companies, or industries, you cover. And if you toil on the so-called buy
side, you are increasingly called upon to develop in-house quality research
that is needed to replace or augment the short-term focus of buy-side
suppliers. In either role, you are functioning as the backbone of the
investment industry, and the quality of your work is critical to determining
the long-term cost of capital, and to measuring the vitality of our markets
and our economy.
As you think about the roles you can play in the investment business, I
recognize that for many of you this continues to be a time of uncertainty.
In the aftermath of the dot-com bubble, and the Global Settlement,
investment research remains in transition. A number of fundamental
questions have yet to be answered: How can we ensure the continued
development of a robust marketplace and compensation for comprehensive,
high-quality research? What can be done to promote coverage of small-
and mid-cap companies in promising sectors that are sometimes ignored?
And, of particular interest to me, how can analysts reorient themselves to
focus less on the earnings-per-share game and more on the long-term
health of the companies they cover?
I'll return to this topic in a few moments. First, let me review where things
stand with the Global Settlement, and also offer some thoughts about how
its principles may apply to fixed-income research.
Implementation of Analyst Settlement
Turning to the Global Settlement, I don't think it's necessary to recite all
that went wrong in the research-analyst community. And as bad as things
were in recent years, I do believe investment research and analysis has
begun to change for the better. The Global Settlement has helped to bring
new and better practices to the analyst profession, as it requires the
settling firms to undertake reforms that will insulate research analysts from
investment banking pressure.
The Commission staff, as well as the other regulators who participated in
the settlement, continue to make efforts to ensure that the settlement
agreement is implemented efficiently and in an even-handed manner. The
independent research portion of the settlement calls for independent
consultants to procure independent research for the settling firms over a
five-year period. These consultants are now in place and have completed
the process of picking those independent research firms that will serve the
settling firms' customers. As of last July, independent research was made
available to the clients of the settling firms, while the consultants have
worked to ensure that the research is conflict-free, high-quality, and useful
for investors.
A different part of the settlement calls for the appointment of independent
monitors to submit a report on the effectiveness of the settling firms'
procedures for compliance with the terms of the settlement. These
monitors, who will begin their review this month, will look at the separation
of research and investment banking, analyst compensation, transparency of
http://www.sec.gov/news/speech/spch050805whd.html
5/27/2005
SEC Speech: 2005 CFA Institute Annual Conference: May 8, 2005 (Chairman William H... Page 4 of 6
firm research and availability of independent research.
Fixed-income
Fixed-income research wasn't directly implicated in the scandals of the late
1990s, and is not covered by the terms of the Global Settlement. But there
are still questions facing fixed-income research that are substantially the
same as those that laid the groundwork for the Global Settlement. For
example, is it the case that fixed-income analysts are any less susceptible
to pressure from their colleagues in investment banking, from the debt
syndicate desk, or from corporate clients themselves? Industry participants,
including issuers and customers, should continue to be proactive in self-
examining and addressing conflicts as they arise: How are you managing
the pressure created when an issuer threatens to retaliate against the
analyst or the firm? What about the pressure created when an institutional
investor threatens to withdraw business from the firm if the analyst
downgrades a portfolio security?
To the extent that bond analysts have been able to resist the pressure to
hype favored banking clients, has it been because of the counterweight
provided by the institutional nature of the buy-side customer base? If so,
what will happen as the character of that customer base begins to shade
more into baby-boomer retiree retail?
I hope those of you in fixed-income research will turn your attention to
questions such as these, and ask whether there is something to be learned
from the history that gave rise to the Global Settlement.
The Challenge to Move Beyond Short-Termism
I'd like to turn to a more fundamental problem that, in my view, affects
multiple aspects of America's corporations and securities markets. It is the
tendency towards a short-term outlook shared by management, investors,
and financial analysts. I realize that speaking out on the need for a longer-
term approach to investment analysis is akin to speaking out in favor of
baseball, hot dogs, and apple pie - it's something (almost) everyone
supports, in an abstract way.
The backdrop to this phenomenon is the pressure that many analysts have
felt to justify their existence on a quarterly - if not daily - basis. Many have
believed, with some justification, that it is no longer good enough to tell
your clients where the best investments are - particularly if those
investments require the fortitude of bearing with a company through a few
lean quarters while a solid management team sharpens its strategy and
plans for the long-term. Over time the key question has changed from
"what is the best investment?" to "where are the best short-term profit
opportunities?" These are two different questions that more often than not
will yield different answers.
Over time, analysts have become obsessed with the question of whether a
company meets its quarterly EPS numbers, and not with whether a
company is built to last. And because of the considerable clout of the sell-
side analyst, this shift from long-term-thinking to short-term results has
echoed through to company managements and to professional investors.
http://www.sec.gov/news/speech/spch050805whcl.htm
5/27/2005
SEC Speech: 2005 CFA Institute Annual Conference: May 8, 2005 (Chairman William H Page 5 of
6
The focus on short-term results has, I believe, had a counter-productive
influence on companies, on investors and on analysts themselves.
For companies, the short-term outlook has given rise to the disturbing
syndrome of trying to force earnings into an artificial model of
uninterrupted quarter-to-quarter growth. One study found that from 1999-
2004, nearly half of the companies in the Dow Jones Industrial Average
always met consensus earnings estimates, or beat them by a penny.
"Making the numbers" often results in unsound corporate strategies, which
pay no regard to the cost of postponed investment. Such a goal is often
achieved only by bending accounting standards.
Highlighting the breadth of the problem is the finding contained in a
National Bureau of Economic Research working paper. The authors
surveyed 401 financial executives and 78% said they would sacrifice an
initiative they expected would create economic value if it would affect their
ability to realize smooth earnings.
I recognize that analysts are not wholly to blame for this short-term
outlook. Indeed, a recent McKinsey paper points out that companies need
to become more effective in identifying investors who will support a
company's long-term outlook, and must also invest the time with research
analysts to make the case for the company's future competitiveness.
The challenge for analysts, companies and investors is to turn this ship
around. There are some encouraging signs, particularly at the company
level. I believe that independent compensation committees are beginning to
focus more on the long-term contributions that management makes and
less on quarterly results. I think the coming requirement that companies
expense their stock options will reinforce this trend. The Sarbanes-Oxley
reforms, particularly the Section 404 internal controls requirement and the
creation of the Public Company Accounting Oversight Board, should reduce
the opportunities for quarterly profit manipulation designed to affect short-
term results.
I hope that investors will begin to change, particularly when they see the
value of an investment in a company that is managed for the long-term.
But it will require the combined efforts of investment professionals and
company management to lead the way.
I am also hopeful that analysts will choose to focus their talents on a
company's fundamental value and its long-term prospects. A short-term
outlook may yield short-term profits for your clients, but this outlook will
present an incomplete - and likely distorted - picture of the companies
you're covering. To state an obvious, but often-overlooked, fact - quarterly
earnings do not reflect companies' long-term viability. Identifying the
factors that will drive long-term growth - such as personnel, strategy,
financial strength and flexibility, internal corporate governance, innovation,
and customer service - may be more difficult to quantify, but they offer a
more accurate and complete portrait of a company's future and, by the
way, are critical criteria for determining executive compensation.
An interesting - and encouraging - illustration of what I'm talking about
appeared in the New York Times on May 2nd The article described how an
http://www.sec.gov/news/speech/spch050805whd.htm
5/27/2005
SEC Speech: 2005 CFA Institute Annual Conference: May 8, 2005 (Chairman William H... Page 6 of 6
Internet retailer is pursuing a number of initiatives aimed at developing
new areas of its business. While the initiatives have been blamed for the
company's stock price falling, the CEO has stood his ground: "If we take
care of customers," he said, "the stock will take care of itself in the long
term."
I have also been pleased to see some securities firms take decisive steps
away from short-termism in their investment research. But there is much
more to be done. Rather than focusing on asking company management
whether they are "comfortable" with the First Call consensus estimate, why
not deepen your inquiry as to their strategic plans? What do they see the
company doing four years down the road, and what sorts of investments -
and sideways movements or interruptions of interim earnings - will be
necessary to get there?
This approach will, ultimately, better serve investors, and it will also
gradually temper the pressures on some corporate executives to fudge the
numbers. It would behoove us all to remember the words of W. Edwards
Deming: "People with targets, and jobs dependent on meeting them, will
probably meet the targets. - even if they have to destroy the enterprise to
do it."
Conclusion
Let me offer a final thought on the future of your profession. Investors of
all sizes and orientations will always seek out value-adding opinions, and
will thus continue to demand research that is timely, accessible, affordable,
and, most important of all, accurate.
The best of you are expert at analyzing a company's business model,
critiquing its strategy and explaining what it needs to do to win in a
competitive marketplace. I have a modest proposal. I'd ask you to focus
your considerable expertise on a question closer to home. There is a huge
demand for high-quality investment research. There are literally millions of
investors in this country who want to understand how to build a durable,
long-term portfolio. Who among you can figure out ways to deliver this
product - a product that the market clearly wants - and ways for you to
profit from it? It's a real challenge, but I am confident that you are up to
the task.
Thanks again to the CFA Institute for giving me an opportunity to speak on
this important topic, and thank you all for listening. I'd be happy to take
your questions.
http://www.sec.gov/news/speech/spch050805whd.htm
Home Previous Page
Modified: 05/09/2005
http://www.sec.gov/news/speech/spch050805whd.htm
5/27/2005
Message
Page 1 of 2
Currin, John
From: Jordan, Elise
Sent:
Wednesday, June 01, 2005 12:32 PM
To:
Currin, John; Carson, Melissa M.
Subject: FW: SEC questions
These are the current stats, although I am getting new ones from him and will keep you posted.
Original Message
From: Jordan, Elise
Sent: Tuesday, May 31, 2005 2:33 PM
To: McArdle, Thomas M.
Subject: RE: SEC questions
In the past two years, the commission has brought about approximately 1200 civil actions.
Over the last two years, the enforcement staff has increased by 356 to a new number of 1,338.
In FY 2004, the commision authorized over 3.3 billion dollars in disgorgement and penalties. That compares to
FY 2003 to 2 billion.
Total number of enforcement actions for FY 2004: 639 actions [679 in FY 2003, 598 in FY 2002]
-- Per deputy director of legislative affairs Peter Kiernan 202-942-0139, 202-942-0010
Original Message
From: McArdle, Thomas M.
Sent: Tuesday, May 31, 2005 2:27 PM
To: Jordan, Elise
Subject: RE: SEC questions
Can you give me the total number of enforcement actions for '04. I think that will be good enough.
From: Jordan, Elise
Sent: Tuesday, May 31, 2005 2:24 PM
To: McArdle, Thomas M.
Cc: Jordan, Elise
Subject: RE: SEC questions
The figures provided were for the most part by fiscal year. Donaldson arrived Feb. 18, 2003. He was here
for part of fiscal 2003, all of fiscal year 2004, and all of 2005 so far.
Comparing FY 2004 and FY 2003 enforcement actions in 2004 were down slightly from 2003. Financial
disclosure was kind of the same thing. Enforcement actions are slightly down from FY 2003 to FY 2004.
There is not a FY,2005 tally yet. The number can increase with more difficult cases.
Total amount of civil penalties [total enforcement]: 1.1 billion in FY 2003 / 1.2 billion in FY 2004
Better stats: In 2002, the SEC's largest civil penalty was 10 million dollars. In 2003, we had 20 cases
where we got 10 million or more. In 2004, more than 40 cases the SEC got more than 10 million.
Complaints being fielded which can be seen as a tally on how busy the agency is electronic tips not
6/1/2005
Message
Page 2 of 2
counting "snail mail" Calendar year figures: 2003 -- 218,005; 2004 -- 310,995; 2005, projected to be
617,000 by year end
-- Per deputy director of legislative affairs Peter Kiernan 202-942-0139, 202-942-0010
Original Message
From: McArdle, Thomas M.
Sent: Tuesday, May 31, 2005 9:23 AM
To: Jordan, Elise
Subject: SEC questions
Elise,
Could you find out for me:
1) How many enforcement actions the SEC has filed for violations of federal securities laws under
Bill Donaldson.
2) How many enforcement actions related to mutual fund abuse the SEC has filed under Donaldson,
and how much it has obtained in penalties.
Thanks.
Tom McArdle
Speechwriting
Ph: 202-456-3546
Fax: 202-456-5709
6/1/2005
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COLLECTION:
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SERIES:
Currin, John
FOLDER TITLE:
SEC Cox, June 2005
FRC ID:
FOIA ID and Segment:
3370
2014-0564-F
OA Num.:
5407
NARA Num.:
5242
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Copyright 1999 Capitol Hill Publishing Corp.
The Hill
April 14, 1999 Wednesday
SECTION: HILL PROFILE; Pg. 37
LENGTH: 1373 words
HEADLINE: Rep. Chris Cox;
Congress, White House await his explosive report on Chinese nuclear espionage
BYLINE: By Betsy Rothstein
BODY:
He looks a little like a hip Mister Rogers, but Rep. Chris Cox (R-Calif.) lives in a very scary
neighborhood.
For the past 10 months, the 48-year-old lawmaker has been at the center of an explosive
investigation that is certain to affect U.S.-China relations. His role as chair of a select
committee to probe the Clinton administration's export of space technology to China has set
him on a mission he calls "one of the most worthwhile efforts" of his career.
The Select Committee on U.S. National Security and Military/Commercial Concerns with the
People's Republic of China had an almost-unlimited budget but only six months to complete
the job.
And now the secret Cox report -- encompassing five volumes, 700 pages, 38
recommendations, 700 hours of interviews and depositions of 150 individuals and 22
hearings -- has languished for an additional three months waiting for declassification.
At the moment, the report sits locked in a secure, alarmed, windowless, compartmentalized
room in the Longworth House Office Building, guarded by an armed CIA agent. Cox said he
expects it to be declassified any day now.
"We received extraordinary cooperation from several different parts of the administration,"
Cox said. "But at the same time we were not pleased with the response, or lack of it, from
other parts of the administration. At this point I don't want to pick a fight. I want to get my
report declassified."
On a matter of such explosive political potential, Cox has nurtured a bipartisanship that has
given his panel a credibility that previous investigations of Chinese influence on the Clinton
administration have not had.
After The New York Times reported last month Cox's finding that alleged Chinese spies stole
nuclear secrets to improve Beijing's neutron bomb, his Republican colleagues showed much
less concern about picking a fight with the administration. Instead, Cox carefully weighs his
every word. He focuses more on the seriousness of what he has found than on scoring
political points.
Cox said he is "deeply disturbed" by what the committee found. "We were investigating the
transfer of technology following the crashes of U.S. satellites," he said. "Rather quickly we
were spread into a widespread problem of [Chinese] espionage."
Cox learned of the espionage while immersed in secrecy and security measures. His staff
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had the highest level of clearance, allowing access to secure compartmentalized information.
The tight schedule demanded grueling hours. "For some folks, it was 6 a.m. to midnight six
to seven days a week," said Brent Bahler, the Cox panel spokesman. "At the tail end, it was
almost 24 hours a day."
Though The Times has given details from the report, Cox insists no leaks came from his
committee.
"Every member of our committee and every member of our staff signed a secrecy oath,"
said Cox, explaining that committee staffers are required to log all press contacts and CIA
monitors all comings-and-goings from the committee's locked safe.
"We have been punctilious in protecting the secrecy of the report," he said. "I assure you the
members of our committee were selected for their discretion."
Cox's personality is an odd combination of laid-back and low-key on the one hand and
completely organized on the other.
Every pen on his desk is properly placed, and sparse papers spread neatly across its clean,
wooden sheen. Books are arranged tidily on bookshelves. Files are neatly categorized. A
piece of stationery that he snatched from a Kuwaiti palace after the Gulf War is kept in
perfect condition. The office's royal-blue carpet is immaculately vacuumed.
"If you need me to straighten up anything, let me know," Cox cracked to a photographer.
Cox has long hidden his non-serious side from the public. It took him years, he explained,
before he could respond to a straight question without cracking a joke.
"Friends of long standing find it remarkable that anyone takes me seriously," Cox said. "I
discovered sarcasm and irony don't work in politics. Ten percent are bound to take you
seriously. After a while you can't say, 'That was a joke. I was kidding."
***
If Cox abruptly gets up during a meeting, he's not being rude. Unable to sit hunched over a
desk for long stretches of time, he uses a stand-up desk, a reminder of the single-greatest
trauma of his life.
It was August 1977. Cox was 25 years old. A St. Paul, Minn., native who had attended a
military academy for high school, Cox was living in Honolulu working for the U.S. Court of
Appeals.
One day, he and a friend went four-wheeling through the island of Molokai. Their
destination: a rain forest.
Roads were non-existent. The ground was muddy, Their Jeep tipped over. His friend fell out
and Cox wound up underneath with his knees pinned behind his ears in a fetal position.
Cox's left cheek pressed into the broken windshield as the back cab rested on his back. With
shards of glass in his eyes, Cox prayed for unconsciousness. For 30 minutes, Cox used his
body to dig a trench and pulled himself out of the wreckage. Once rescued, he learned that
he was paralyzed from the waist down.
In the hospital, there was little he could do.
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"I could be in three positions," Cox once described. "Flat on my back with no pillow, or on
one side or the other. And when I was on my side, I was really on my side. Every six hours
they would just rotate me, like a barbecued pig on a spit."
For one year, he wore a back brace, he learned to walk, to put on socks and reach for a
book.
Eventually, he returned to work full-time at a law firm in Newport Beach, Calif. In 1986, he
went to work as senior associate counsel to President Reagan.
"He was a workaholic," recalled Rep. Dana Rohrabacher (R-Calif.), who was a Reagan
speechwriter. "I'd have to haul him out of his office half the time so he could have some
fun."
Cox admits he worked hard: "I was unmarried and there was no reason for me not to put
everything into the job. There were very long hours and long weeks and I knew it was
temporary."
On Feb. 1, 1988, Cox resigned his post to run for Congress and has held his seat by a two-
thirds victory margin ever since.
"Chris is very methodical and his friends are always after him to let loose and be a little
more passionate and aggressive," said Rohrabacher. "He is so responsible that it takes a
long time before the full weight of his influence is felt," Rohrabacher continued. "But I will
have to say he has the patience for Job, but sometimes his friends don't have much patience
for him."
Still, many in Congress look to Cox as the voice of reason.
"Cox is one of those people who thinks beyond the next step," said Rep. Jerry Weller (R-III.)
"I've never seen him lose his temper. When he feels passionate, he grabs a bit and he
burrows into it. He's a policy wonk."
Said Sen. Ron Wyden (D-Ore.): "He's extraordinarily intelligent and yet he doesn't want the
other person to think he's arrogant. He's not the kind of guy who bursts into the room.
But because of his gracious manner and pragmatic bent he can get a lot done."
"I'm very high on Chris Cox," said House National Security Chairman Floyd Spence (R-
S.C.). "He's not a hot dog. He's not that much of an outgoing person. He's an intellect. He's
persuasive."
Former Attorney General Ed Meese said Cox "is a strong conservative, but gets along. He
demonstrates his leadership in a non-threatening way, particularly in a world with a lot of
egos. I consider him one of the brightest stars of Congress."
Eight years ago Cox's life took a turn when he married a vice president of Continental
Airlines. He and his wife, Rebecca, now have three children.
"It is an overwhelmingly happy thing to have a child having three kids is just beyond my
hopes and expectations," said Cox. "Now I have many more reasons to live than the office."
At-a-glance
BORN:
(b)(6)
HOME:
Newport Beach.
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EDUCATION: University of
Southern California;
Harvard business and
law degrees.
RELIGION:
Roman Catholic.
FAMILY:
Married to Rebecca,
three children.
CAREER:
White House senior
associate counsel, pro-
fessor of tax law.
GRAPHIC: Picture, Rep. Chris Cox (R-Calif.) has avoided extreme partisanship. LAUREN V.
BURKE
LOAD-DATE: April 23, 1999
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