SEC Chair Cox Rejects Senator McCain's Call to Resign

In response to a call from the Republican presidential candidate for his resignation, SEC Chair Christopher Cox defended the Commission’s actions in the ongoing financial crisis. While expressing great respect for Senator McCain, Mr. Cox rejected the call for his resignation, noting that a change in leadership at this moment would inevitably disrupt the work of the SEC at just the wrong time. History will judge the quality of the SEC response’s to this economic crisis, he observed, but now is not the time for the Commission and its dedicated men and women to be distracted by the ebb and flow of the current election campaign. He reiterated his intention to leave the SEC at the end of the Bush Administration.

The chair went on to detail the decisive actions that the SEC has taken to address the extraordinary challenges facing the financial markets. He also emphasized the Commission’s zero tolerance for naked short selling.

This week the SEC adopted a package of measures to strengthen investor protections against naked short selling, including rules requiring a hard T+3 close-out, eliminating the options market maker exception of Regulation SHO, and expressly targeting fraud in short selling transactions. Earlier, the SEC issued an emergency order enhancing protections against naked short selling in the securities of primary dealers, Fannie Mae, and Freddie Mac. Also, the SEC announced emergency plans for a rule to ensure public disclosure of short selling positions of hedge funds and other institutional money managers.

On the enforcement front, he noted the sweeping measures the SEC has undertaken against market manipulation. He also mentioned a landmark enforcement action against a trader who spread false rumors designed to drive down the price of stock.