Chairman Christopher Cox is pushing a plan that would require the agency's Enforcement Division to seek approval from the five commissioners before negotiating fines with companies, according to Bloomberg News and the Washington Post.

In proposing this change, Cox is seeking to avoid disagreements that have erupted among the commissioners over corporate fines negotiated by enforcement attorneys. According to news reports, these disputes have delayed settlements with some firms, such as Brocade Communication Systems, where a former CEO has pleaded not guilty to criminal charges over the alleged backdating of stock options.

The split at the SEC reflects the larger political debate over whether companies should be fined over misconduct by corporate officers. Republicans, including Commissioner Paul Atkins, and business groups have argued that levying large fines against companies ultimately hurts investors, while Democrats contend that corporate fines are a necessary deterrent.

The policy change likely will result in fewer and smaller fines, some SEC observers say. "What the commission is really saying here is, 'We don’t like these fines, and we're going to make it damn difficult to bring them,' " James Cox, a securities law professor at Duke University, told Bloomberg News.

SEC spokesman John Nester told the Post that the new policy will give the Enforcement Division "a stronger hand in settlement negotiations" and should result in more productive negotiations with companies. Likewise, Enforcement Division Director Linda Thomsen said settlements that have been pre-approved by the commissioners would be "fast-tracked with little or no further commission debate," Bloomberg News reported.

*This article originally appeared in the April 20 edition of ISS' Governance Weekly.