In the halls of Congress, Rep. Christopher Cox (R-Newport Beach), who has just been nominated to be the nation's top securities regulator, stands out for his intelligence.
He reads math books for fun, issues position papers bristling with footnotes and features his two advanced Harvard degrees ("with honors") in his biography.
When it comes to the work he performed as a lawyer for one of the state's most notorious con men, however, he pleads ignorance.
Apparently he was unaware that William E. Cooper was a crook or that his company, First Pension Corp., was a fraud. In 1985, when Cox assured state securities regulators that a new Cooper investment scheme would be "low risk" and an absolute boon to small investors trying to save for retirement, he was apparently unaware that the scheme was really designed to hide the losses already incurred by Cooper's investors and to keep the scam alive. In 1991, when Cooper hosted a fundraiser for Cox at his Villa Park home, Cox thought of him as merely "an upstanding member of the community."
A few years after that, the fraud finally exposed, Cooper and two partners went to jail.
And now, Cox has been nominated by President Bush as chairman of the Securities and Exchange Commission.
"If his job is to ferret out fraud in the securities markets, then his role in the First Pension case is relevant," says Michael Aguirre, who represented a few hundred First Pension investors in a 1994 state court lawsuit and is now San Diego city attorney. Latham & Watkins, the law firm that employed Cox, eventually settled investors' claims against it on undisclosed terms.
Cox didn't respond directly to my questions about First Pension. It appears that the White House stashes its nominees for high office under a cone of silence pending their Senate hearings. But over the years, he has testily denied that he knew anything was awry during the two years he worked with the company. His defenders say his role was confined to helping prepare a preliminary securities offering, and that he left Latham years before the offering became final or the law firm got around to verifying the information it had been given by its client.
His spokesmen point out that Aguirre dropped him as a named defendant in the lawsuit, and suggest that Aguirre couldn't make a case against him. Aguirre says it was because suing a congressman presents unique difficulties, and that in return for dropping Cox from the case he secured an agreement that Cox's actions could be imputed to Latham in assessing its legal liability.
