Cox Law Helped Enron Hide Fraud

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.