Christopher Cox stepped down as U.S. Securities and Exchange Commission chairman, leaving behind a demoralized agency that failed to spot Bernard Madoff's alleged fraud and had its role diminished by the collapse of Bear Stearns Cos. and Lehman Brothers Holdings Inc, Bloomberg reported.
His resignation took effect at noon today in Washington, agency spokesman John Nester said. During Cox's 3 1/2-year tenure, the SEC has been criticized by lawmakers, investors and its own inspector general as lacking aggressiveness and being deferential to Wall Street banks. President Barack Obama, a Democrat, picked Mary Schapiro, the head of the U.S. brokerage industry's self-regulator, to succeed the Republican Cox.
"I respect Chris Cox, but there's no question that the commission has been much too passive in area after area under his leadership," said Harvey Goldschmid, a former Democratic SEC commissioner who remains in contact with agency employees. "The morale problems and the lack of public regard for the agency must be immediately addressed by Mary Schapiro," said Goldschmid, a law professor at Columbia University in New York.
The agency lost clout in March when the Federal Reserve rescued Bear Stearns and began lending to and examining investment banks regulated by the SEC. Its domain shrank further in September after Lehman declared bankruptcy, Merrill Lynch & Co. sold itself to Bank of America Corp., and Goldman Sachs Group Inc. and Morgan Stanley became Fed-regulated commercial banks.
Another blow came in December when Cox, 56, admitted the SEC missed Madoff's alleged $50 billion Ponzi scheme even though it had received "credible and specific" complaints about the New York-based money manager for at least a decade.