As he enters his second year atop the watchdog agency, Cox likely will come under increasing pressure to prove it.

Two things seems certain to be on the chairman's agenda. First, he will lead the five-person commission to reform but not gut implementation of the Sarbanes-Oxley Act and its most controversial aspect, Section 404.

Second, Cox likely will support some increase in hedge-fund regulation by the SEC, even if it's just a more systematic way of getting so-called census information about who is running these exponentially growing pools of private investment capital.

Some on Wall Street and in business trade groups probably will find wanting whatever the SEC does on either issue. They would prefer a legislative revamp of Sarbanes-Oxley, which in its current form allegedly has endangered U.S. financial pre-eminence in favor of financiers and securities exchanges in London, Hong Kong and elsewhere.

Critics' primary evidence is the overwhelming number of big initial public offerings that have launched in London, Hong Kong and elsewhere - anywhere, it seems, other than New York.

Ignored in this picture is that many of the IPOs involved the privatization of state-run companies, which presumably would favor local exchanges like Hong Kong's. Also, as noted previously in this column, it simply must be acknowledged that the world has changed and there are places other than New York that can provide significant pools of investor liquidity and attract issuers. Finally, as cited in an Aug. 2 Wall Street Journal column, fees to launch an IPO happen to be significantly higher in the United States than elsewhere.

Cox has acknowledged there's a problem with SarbOx Section 404: It has cost way too much to implement the straightforward requirement that companies examine their internal controls and have auditors certify their adequacy. The problem is overcautious companies have gone overboard.

"To the extent that the perception exists, and I believe that it does in Europe and elsewhere, that the costs of regulation and the costs of litigation in the United States are comparatively unpleasant, and they'd like to sell themselves comparatively as better in those respects, we need to do everything that we can to make sure that we achieve our objectives of high standards without unnecessary costs. And that's something that is all in implementation. It's perhaps some art as well as science."

That's Cox speaking in late April to the Senate Banking Committee. At the same hearing he said high standards in the United States have been a big reason the United States has enjoyed strong, deep markets:

"Rather than participate in a race to the bottom that surely, in terms of competitive advantage, we would lose, it should be our objective to work with other high standards countries to make sure that that's the way the world goes."

As for hedge funds, some find sufficient the current regulatory regime that subjects the 8,800 and growing legion of funds to the antifraud basics of securities law.

Cox, however, said in late July that the current level of regulation is inadequate. After a court rejected an SEC rule approved in 2004 requiring most hedge fund advisers to register and be subject to SEC inspections, Cox said it was "back to the drawing board" on that front.

Don't expect that drawing board to remain blank.

-- NEAL LIPSCHUTZ (Dow Jones Newswires)