Trick or treat in September?

September 19, 2005

While I normally write about things I find in the filings, today’s WSJ interview (it’s subscription-only, but here’s a Reuters summary) with Chris Cox is worth noting. The headlines mostly focus on Cox’s take on rules for hedge funds — the rules that outgoing chairman William Donaldson put in place as he walked out the door. But some of the stuff he has to say in the Q&A on executive compensation should be music to footnoted.org regulars’ ears. Here’s two excerpts:

On executive comp: It is important that we stay up to date and even more important that investors and consumers have all the information they need in order to obtain the best possible services from executives and managers at the lowest possible price. Over time, the prevalent forms of compensation have migrated away from what is transparent to what is opaque. In many cases, the lion’s share of an executive’s compensation might come in forms that almost entirely elude disclosure. That clearly needs to be addressed.

On the small investor: My natural bent is towards the retail investor and the little guy. I want to make sure that, because investor protection is our fundamental mission, we keep that investor uppermost in mind in everything we do. That’s why I’m such a fan of the initiative begun under Chairman Arthur Levitt to translate the impenetrable legalese in disclosure documents intended for retail investors into plain English. There’s much more that we can do in this area. At the same time, I think we can take the next logical step and go out of our way to listen to retail customers and ask them what they think.

The interview — Cox’s first extensive one since taking office last month — certainly indicates that the new Chairman (and former securities lawyer) may be a lot more pro-investor, pro-disclosure than many of us thought. Is it a trick? Or is it a treat?

For another view on the Cox interview, check out Greg Newton’s Naked Shorts blog here. Greg poses five questions that he thinks the WSJ should have asked Cox.

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