SEC Chief Stepping Down
Updated from 1:10 p.m.
Securities and Exchange Commission Chairman William Donaldson announced Wednesday that he will step down at the end of the month.
The news comes as the agency faces other top-level upheaval. Enforcement chief Steve Cutler quit last month and was replaced by Linda Thomsen. Meanwhile, SEC Commissioner Harvey Goldschmid has indicated he too intends to leave this summer. Goldschmid is one of two Democratic commissioners on the five-member SEC commission.
It takes a majority vote to bring about any SEC enforcement action. Donaldson, a Republican and longtime friend of President Bush's family, often has sided with the two Democratic commissioners on the SEC.Donaldson, a founder of the old Donaldson Lufkin Jenrette investment bank, took over the helm of the SEC at critical point in its history. He took over the top job at the SEC in early 2003, while the stock markets were being roiled by a series of corporate scandals. Bush tapped Donaldson to replace former SEC Commissioner Harvey Pitt, whose brief tenure was marked by criticism that he was slow to act on the collapse of Enron and on Wall Street's role in puffing up tech bubble of the late 1990s. During Donaldson's tenure the SEC levied some of its biggest fines in history, including a $750 million sanction against WorldCom, the beleaguered telecom giant that's now called MCI (MCIP). Donaldson also has been an advocate of stronger regulation of hedge funds. Last year, the agency adopted rules that will require most hedge fund advisers to register with the government within two years, firming up oversight on an industry that has been linked to several high-profile financial blowups. But Donaldson's tenure also had its problems. While the SEC has moved faster in bringing enforcement actions, it continues to chase New York Attorney General Eliot Spitzer for the public limelight. Last week, a Government Accountability Office audit reported that the agency failed to institute some of the same financial controls it requires of the public companies it polices. That news came just as the SEC was dealing with the disclosure of a $48 million budget shortfall. The Bush administration has not named a successor.
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