When Chris Cox became chairman of the Securities and Exchange Commission, he made it a priority to bring together a commission that had been bitterly divided under his predecessor, William Donaldson, who sometimes sided with the two Democrats on the commission in 3-2 votes. A series of unanimous votes followed as Mr. Cox appeared to have worked behind the scenes to bring about unanimity.
That all blew apart this week. The issue was whether companies can ever be forced to allow dissident candidates for director to appear on ballots sent out by companies. That was an issue that had bedeviled Mr. Donaldson, who first endorsed a very limited proposal and then backed away from it in the face of strong business opposition.
Mr. Cox would have let the issue lie, but the Second Circuit Court of Appeals ruled that the S.E.C.’s longstanding interpretation of current law was dubious. That meant that without S.E.C. action, it would be possible for companies in that circuit, which includes New York, to be forced to allow dissident candidates onto ballots. Shareholders would first have to amend bylaws to allow such dissidents, but the court said they could get such a bylaw amendment put before investors.
But the court also said that the S.E.C. could restore the status quo by just voting to agree with the old interpretation that shareholders could not force such a vote.
When the court ruling hit, Mr. Cox promised it would be settled immediately — only to find that there was no consensus available. So he stalled for a year.
This week he tried to stall again, proposing that the S.E.C. put out for comment two contradictory proposals. One would adopt the old rules, effectively banning dissident shareholder nominations. The second would allow them, but set a very high bar to adopting such a proposal. (It would take 5 percent of a company’s shares to get such a proposal before shareholders.)
His idea was that the S.E.C. would put out both ideas, and get more reaction.
But the two Republicans had other ideas. Late Tuesday night, they got the wording of one of the proposals changed, to say that it was the commission’s current interpretation of the rules. That, the Democrats say, was designed to end the debate by satisfying the court ruling and barring shareholder votes.
Mr. Cox went along at Wednesday’s meeting. We don’t yet have the wording of what was passed — the S.E.C. is notoriously slow about that — but it appears that if nothing happens, those who oppose shareholder nominees for director will have prevailed. The S.E.C. will take public comments, but they will not matter unless Mr. Cox is willing to push something through with the support of only Democrats.
Mr. Cox did his best to navigate a center course. But he was finally forced to choose sides, and he did.