Bush Nominates Two Democrats to SEC: More of the Same is Likely

Implications: Will President Bush's recent nomination of two Democrats to the SEC make it more investor friendly?  Not likely!

Analysis: As per the referenced article, President Bush, at the behest of Senate Majority Leader Harry Reid (Democrat – Nevada), recently nominated two Democrats to fill commissioner vacancies at the SEC.  Interestingly, both nominees are former SEC staff attorneys.      

As a matter of background, the SEC is headed by a five-member commission with each commissioner, in the normal course, serving a staggered five year term.  Commissioners are limited to serving two terms.  

The President is empowered to appoint all SEC commissioners subject to the advice and consent of the Senate.  No more than three commissioners may be members of the President’s political party.  The current Republican Commissioners are Christopher Cox (Chairman), Paul Atkins and Kathleen Casey.  President Bush’s nomination of Luis Aguilar and Elisse Walter, if approved by the Senate as expected, will restore the SEC to a full slate of five commissioners – three Republicans and two Democrats.         

While I have no firsthand knowledge of Luis Aquilar, various news accounts cite him as being an outspoken critic of the Sarbanes-Oxley Act of 2002 (“SOX”).  As a former SEC Assistant Chief Accountant, I am quite comfortable in my belief that such an anti-SOX position, if in fact true, would be relatively rare among current and former SEC staffers.     

In contrast to Aguilar, I have both first-hand and second-hand (via my former SEC legal colleagues) knowledge of Elisse Walter as our former careers with the SEC’s Division of Corporate Finance overlapped by several years.  My collective knowledge of her is one of being a politically astute lieutenant who rarely dared to challenge the often self-serving positions and interpretations of corporate registrants and their agents.  Such impression would appear consistent with the views of others recently expressed in the media.   

Given the preceding and the continuing dominance over the Commission of the politically-savvy Chairman Christopher Cox (former Republican Congressman from Orange County, CA), whose long-standing and zealously pro-business positions are well-known, I would not expect the appointments of Aguilar and Walter to have any substantive impact upon the current “investors be damned” posture of the SEC’s political leadership.