Securities and Exchange Commission Chairman William Donaldson said yesterday he will resign at the end of the month, capping a 2 ½-year...

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WASHINGTON — Securities and Exchange Commission Chairman William Donaldson said yesterday he will resign at the end of the month, capping a 2 ½-year tenure that marked the most active period since the agency’s founding at the end of the Great Depression.

The Bush administration tapped Donaldson, who turns 74 today, in 2003 to help clean up the securities industry after Wall Street trading abuses and scandals at Enron and WorldCom shook the stock market and the confidence of investors.

The former investment banker and chairman of the New York Stock Exchange mostly steered clear of the headlines and pushed ahead with dozens of new rules designed to heighten oversight of the $7.9 trillion mutual-fund industry and the largely unregulated hedge-fund sector.

The Associated Press was reporting last night that President Bush intends to nominate U.S. Rep. Christopher Cox, R-Calif., to head the SEC and may make the announcement as early as today.

That information came from Republican officials who spoke on condition of anonymity.

Cox, 52, is chairman of the House Homeland Security Committee. He was first elected to Congress in 1988 from California’s Orange County.

On Donaldson’s watch

William Donaldson has presided over one of the most tumultuous periods in the agency’s history, pushing out sweeping corporate rules following the 2002 Sarbanes-Oxley Act and more recently passing rules to restructure the U.S. markets. A list of notable events during Donaldson’s tenure:


Former New York Stock Exchange Chairman William Donaldson is nominated by President Bush to succeed Harvey Pitt as chairman of the commission Dec. 10.


Donaldson is confirmed Feb. 13 by a unanimous consent vote.

Donaldson pledges the SEC’s cooperation in September after New York Attorney General Elliot Spitzer announces a probe of late-trading and market-timing abuses in the mutual-fund industry.

The SEC votes Sept. 24 to require mutual funds to improve disclosure about their fees and make other disclaimers about their performance. Donaldson also expresses support for opening up corporate ballots to shareholder nominees, drawing fire from business lobbyists opposed to the plan.


SEC proposes independent chairmen for mutual-fund boards Jan. 14. “These directors are investors’ first line of defense in ensuring that their interests are being served,” Donaldson says. The plan is opposed by House Republicans.

SEC proposes, in a 3-2 vote July 14, requiring hedge-fund managers to register with the commission. Donaldson breaks from fellow Republicans to side with the panel’s two Democrats.


Donaldson calls hedge funds “an accident waiting to happen” in a Jan. 28 interview.

SEC votes 3-2 April 6 to extend the trade-through rule to electronic markets over opposition from firms like Charles Schwab Corp. and Fidelity Investments. Donaldson says: “Our actions today will, I am certain, irritate a handful of influential interests.”

Source: Bloomberg News

A White House spokesman did not return calls for comment about a possible successor to Donaldson.

At a news conference yesterday, Donaldson refused to speculate about his successor.

“This period has represented an extraordinarily active and effective time for the agency,” Donaldson said. “Although there will always be more work to be done to preserve and enhance the integrity and strength of our nation’s corporations and markets, I believe the time has come for me to step down and return to the private sector and my family.”

Besides Cox, five other names surfaced in early speculation yesterday about a Donaldson replacement. They were former SEC enforcement chief Richard Walker, who serves as a top lawyer with Deutsche Bank; Peter Wallison, a fellow at the American Enterprise Institute and a former White House counsel; Treasury Department official James Doty, a former SEC general counsel with close ties to the Bush family and the sitting Republican commissioners, Cynthia Glassman and Paul Atkins.

Under Donaldson’s watch, the agency hired an unparalleled 1,200 new employees and brought a record 1,700 enforcement actions against securities violators from Adelphia Communications to Xerox, collecting some $7 billion in disgorgement and penalties.

But in recent months, business groups have begun to complain that the SEC has gone too far in interpreting the 2002 corporate-accountability legislation known as the Sarbanes-Oxley Act. They argue the agency imposes too many new costs without producing enough benefits.

Donaldson’s departure could presage an era of dramatic change and give the Bush administration an opportunity to reshape the SEC.

On several key issues, including rules on stock-market structure and the imposition of civil penalties against corporations, Donaldson has cast his vote with the agency’s two Democrats, both of whose terms will end this year.

Donaldson said: “Right from the beginning, we felt that the enforcement side of our work had to be reinforced. … We’ve done that.”

But he acknowledged that there has been “legitimate worry” about parts of Sarbanes-Oxley Act. However, he said there is broad support for the law generally.

He also cautioned business critics of the agency, noting that as a result of the abuses of a few years ago, “disillusionment with American industry goes way beyond just the investor community” and that polls show much of the public views “the business world as not a very attractive group of people.”

William Donaldson

Age: 74

Experience: Chairman, Securities and Exchange Commission, 2003-present; chairman, Donaldson Enterprises, 2001-03; chairman, president and CEO, Aetna, 2000-01; senior adviser, Donaldson, Lufkin & Jenrette, 1996-2000; chairman and CEO, New York Stock Exchange, 1990-95; chairman and CEO, Donaldson Enterprises, New York, 1980-90; dean, professor, Yale Graduate Management School, 1975-80; special counsel to the vice president, 1974; undersecretary of state, State Department, 1973-74; chairman and CEO, Donaldson, Lufkin & Jenrette, 1959-73; U.S. Marine Corps, 1953-55.

Education: B.A., Yale University, 1953; MBA, Harvard University, 1958.

Family: Wife, Jane; children Adam, Kimberly, Matthew and Andre.

Source: The Complete Marquis Who’s Who, the White House, Yale University

“I would have thought that most business organizations would get behind positive changes, get behind investor-friendly regulations,” Donaldson said.

The Business Roundtable, a group of corporate chief executives, yesterday issued a statement in which they urged Donaldson’s eventual successor to strike “the right balance so that companies continue to grow and create jobs.”

The U.S. Chamber of Commerce, which is suing the agency over mutual-fund rules, pressed the need for “modern, effective regulations that foster innovation and growth,” according to a statement by Chief Executive Thomas Donohue.

“There are certainly elements of the business community that are hoping for a counterrevolution,” said David Becker, general counsel at the SEC from 2000 to 2002.

“Whether or not the administration will accommodate is an open question. Who the chairman of the agency is, is more important than it has been in a long time.”

Donaldson said there are a number of issues still “cooking” at the agency, including providing investors with more information about executive compensation.

“Donaldson has been a far stronger champion for investors that we had reason to expect,” said Barbara Roper, director of investor protection for the Consumer Federation of America. “The likelihood is we will see a very different and less active SEC emerge.”

Washington Post staff writer Jeffrey H. Birnbaum also contributed

to this report.