Chris Cox, 3/7/95:

The threat of lawsuits over so-called forward looking information, how is this company going to do in the future, is so serious that many if not most CEO’s these days refuse to talk to the press at all about their company’s performance and yet that is exactly the kind of information the market needs to operate. How a company has performed in the past is interesting, but everybody wants to know what is going to happen from here forward. That is the information the market seeks out.

Shortly thereafter, Cox marshaled a bill through Congress that made it easier for executives to avoid liability for making misleading statements to investors about future prospects.

Ken Lay, 8/24/01:

We think the company is on solid footing, and we’re looking forward to continued strong growth. We had a very, very strong first half, including second-quarter net income up 40%, earnings per share up 32%, and operational physical volume delivery up 60%. In the last five years, we have had 25% per year compounded annual growth in earnings per share.

I think you’ll continue to see strong growth in all of our business areas. Our revenues and income quarter-to-quarter continues to be strong and we have strong momentum.

Shortly thereafter, Enron declared bankruptcy.

Chris Cox speaking on the House floor on the state of the securities law, 3/7/95:

It is a legal torture chamber for plaintiffs and defendants alike, more suitable to the pages of Charles Dickens’ `Bleak House’ than a nation dedicated to equal justice under law. The current system of private securities litigations is an outrage and a disgrace.

Cox said this, of course, before he marshaled through the Private Securities Litigation Reform Act of 1995 which significantly weakened protections for investors.

“The couple trillion dollars that we spend through every year, and even more that we spend when you count our borrowing, is conducted with such a lack of discipline, that I am amused if not ashamed by the indignation that we would show when we have executives from WorldCom or Enron or Arthur Andersen come before us and get high judgment.”

– Chris Cox, September 28, 2004

The Private Securities Litigation Reform Act of 1995, championed by Chris Cox, ended up bad. But if Cox had his way it would have been even worse. From a 2/7/95 AP story:

Attorneys and accountants who complain they’re sued too often for fraud have found a supporter in Rep. Chris Cox, a former securities lawyer whose own work has been criticized in a class-action lawsuit.

Cox, a California Republican, is sponsoring legislation that could drastically curtail such lawsuits against attorneys in the future.

The proposal, a plank in the GOP “Contract With America,” comes as lawyers representing investors stung in a $ 121 million failed investment say they’re considering whether to add him as a defendant in their suit.

The bill being pushed by Cox would prohibit investors injured by securities fraud from suing lawyers and accountants who advocated the deal unless they can prove the lawyers purposely assisted the fraud.

In other words, Cox’s preferred version would have completely protected lawyers and accountants who enable corporate cheats unless plaintiffs could prove they came in with the specific intention to assist fraud. That’s like saying an tire manufacturer is only liable for a car rollover if they produced the tire with the specific intention to roll the car over. Cox wanted almost complete protection for unethical corporate accountants and lawyers.

Chris Cox, who Bush will shortly announce is his nominee to become chairman of the SEC, was the primary sponsor of the Private Securities Litigation Reform Act of 1995. That law helped set the stage for Enron and others to hide their fraudulent accounting practices. Moreover, it helped shield these corporations from liability once the fraud is exposed. From a 1/20/02 LA Times editorial by William Lerach and Al Meyerhoff:

The Private Securities Litigation Reform Act might more accurately be labeled the “Corporate License to Steal Act.” Approved by just two votes over a presidential veto, the law was written largely by and for powerful corporate interests. It gutted historic safeguards against fraud and weakened those protecting investors. It set up legal obstacles that may have enabled Enron to hide its questionable accounting practices. Under the law, victims must prove a fraud in detail without access to evidentiary documents. Damages are limited. Those collaterally responsible for a fraud like, perhaps, an accounting firm, are protected from liability.

In other words, if you liked corporate scandals like Enron and WorldCom, you’ll love Chris Cox.

AP reports that Bush will nominate Rep. Chris Cox to chair the SEC. In 1995, Cox “sponsored the Private Securities Litigation Reform Act, which restricted the ability of investors to sue for securities fraud.” He sponsored the bill the same year he was sued for “misleading regulators and investors about the condition of a real estate investment fund” in the 1980s. The charges against Cox personally were dropped after his law firm settled for an undisclosed amount. Cox said the experience caused him “to sympathize with people who are victimized in these suits.” That sympathetic group includes people who lie to investors, regulators and the public.

Exxon’s execs have it rough these days. As Fortune Magazine reported, “If oil simply stays where it is now, Exxon’s cash could approach $40 billion in 12 months. By then [Exxon's CEO Lee Raymond] is expected to have handed off the top job — and the headache of what to do with all that cash.” What a pity, those kinds of headaches.

One thing Exxon won’t be spending their cash on is desperately-needed renewable technologies. ABC News reports that Exxon (unlike several other top oil firms) is refusing to invest in renewables like solar and wind energy until Uncle Sam ponies up more subsidies. A top Exxon exec tells ABC that clean energy is “an uneconomic niche and our business is not built around the expectation of a bunch of subsidies to make a profit. We want a business that is robust on its own merits.”

Oh, really? If so, Exxon really ought to just close up shop. As Grist Magazine reminds us, “the oil industry gets billions in direct subsidies and tax breaks, and also benefits from externalizing the costs of its pollution onto the public, from massive public investment in roads and highways to carry oil-guzzling vehicles, from massive federal subsidies to agribusinesses that use petroleum-based fertilizers, and from a lax regulatory environment that allows automakers to delay improving fuel economy.”

Somebody ought to send a couple cases of Advil to Exxon headquarters — those wealth headaches seem to be seriously imparing their connection to reality.