Corporate Governance

Independent Agencies and "Firing" the Chairman

By J. Robert Brown

One this is now certain with respect to the Securities and Exchange Commission in November.  The president has the power to designate the chair of the Commission and to fill any openings.  There is no power to remove existing commissioners; the president must wait until their terms expire.  With three seats having just been filled, there will be no openings in the near term unless someone resigns.

With that in mind, Barak Obama can be expected to appoint one of the two democrats on the Commission (Elisse Walter and Luis Aguilar).  Now we hear that if John McCain is elected, he intends to "fire" Cox.  This doesn't mean removing him as a commissioner (something that requires good cause) but replacing him as chair.  In fact as McCain noted:  ?The chairman of the SEC serves at the appointment of the president and has betrayed the public?s trust. If I were president today, I would fire him.?  He is quite right on that score. 

So, in this case, firing means removing him as chair.  As a result, under the current configuration, McCain will need to move the position to either Paredes or Casey.  Of course the more likely thing to happen is for Cox to step down either just before or just after the election, allowing the new president to add a member who will serve as chairman.

Full post as published by The Race to the Bottom on September 18, 2008 (boomark / email).