Beltway's Already Betting on Next SEC Boss

Who will run the Securities and Exchange Commission after Arthur Levitt? That will depend mostly on the outcome of the Presidential election, but there are already three leading contenders. One is a Nashville lawyer. One is a partner at a powerful Washington law firm. The third, another lawyer in private practice, would be the first woman to become SEC chairman.

Levitt hasn't said publicly whether he wants to keep the job when a new administration takes over. It's widely expected, after already serving longer than any other SEC chairman, that he'll retire. And with the presidential elections only five months away, the speculation has begun in earnest.

Any successor to Levitt, an industry insider-turned-reformer, will have the crucial task of overseeing capital markets drastically altered by technology and global competition.

The next SEC head will certainly be thrust into high-profile battles over issues such as the conversion to trading stocks by one-cent increments instead of fractions of a dollar, and the long-term impact of broad electronic trading, while also serving as a consumer watchdog.

Should Vice President Al Gore end up in the White House, industry insiders say his top picks for the SEC post would include Nashville securities lawyer James H. Cheek III and Washington, D.C., lawyer Colleen Mahoney, a former acting SEC general counsel and one-time executive assistant to Levitt. (Mahoney has done legal work for TheStreet.com.)

James H. Cheek, III

Should Texas Gov. George W. Bush win November's election, the smart money's behind James Doty, a partner in the Washington, D.C., law firm Baker Botts, to head the SEC.

"If Gore ends up as president, a lot of people speculate about Jim Cheek," says Barry Barbash, former director of investment management for the SEC and now a partner with the law firm Shearman & Sterling in Washington, D.C. "If Bush is elected, the name that comes up is Jim Doty."

James R. Doty

Mahoney, a partner at the powerhouse law firm Skadden, Arps, Slate, Meagher & Flom, was an SEC lawyer for 15 years, is married to Thurgood Marshall Jr., who is the son of former Supreme Court Justice Thurgood Marshall, an aide to Gore and President Clinton's current cabinet secretary.

Collen P. Mahoney

Appointing Mahoney "makes a lot of sense if Gore wins," says Edward Fleischman, a former SEC commissioner who's now a lawyer in New York with Linklaters. "She's a straight arrow. You would have no questions about her integrity."

Both the Bush and Gore campaigns say it's premature to discuss candidates for the SEC leadership.

"It's not a matter of there being a short list," Gore's campaign spokesman Jano Cabrera said. "A list doesn't exist."

The Contenders

Thus far, speculation has focused largely on Doty and Cheek.

Doty, a Rhodes Scholar and Yale Law School graduate, became a partner at Baker Botts in 1977 and left briefly to serve as the SEC's general counsel in the early 1990s, when George Bush was president.

Doty, 59, says he has not spoken to Gov. Bush about a possible SEC chairmanship, but knows many people in the industry have mentioned him as a candidate.

"When (Bush) is the president-elect, he will have many people who will want to be chairman of the SEC," Doty says. "I think every serious securities lawyer is interested in this job."

"Jim would be vigorous as a prosecutor going after the bad guys," says John Coffee, a law professor and securities markets expert at Columbia University and a Doty classmate at Yale.

When Clinton chose Levitt to chair the SEC in 1993, Levitt already had weighty credentials on Wall Street and inside the beltway. For 11 years he was chairman of the American Stock Exchange. Levitt also owned Roll Call, a scrappy but influential Capitol Hill newspaper.

Cheek, by contrast, is a Wall Street outsider.

"He's a very sophisticated guy who just so happens not to be in Washington or in Manhattan," said Bill McLucas, a former SEC enforcement director who is now a lawyer with Wilmer, Cutler & Pickering.

Cheek, a Vanderbilt University School of Law graduate, has practiced at Nashville firm Bass, Berry & Sims since 1970 and was a candidate for the SEC post when Levitt was chosen.

"He would have the support of the New York Stock Exchange and the American Bar Association," Coffee says. "He's in the mainstream of the securities bar's position on most issues. Reformers are usually out in front on issues."

Cheek, 57, couldn't be reached for comment this week.

McLucas, who was Mahoney's boss at the SEC, described her as a "terrific lawyer" who "would be a fabulous part of any administration."

Mahoney, who is 42, declined to comment on the SEC speculation.

Levitt's term expires in 2003, and he could continue on as a commissioner if the new president replaced him as chairman. He has not said publicly whether he plans to retire, says SEC spokesman Chris Ullman.

"He's working hard and carrying out his agenda," Ullman says. "He loves his job."

Coffee also said that if Gore is elected, and an industry favorite such as Cheek doesn't win his nod for the SEC chair, the realities of campaign finance may help dictate who is chosen.

"If it were not someone like Jim Cheek," he says, "I suspect that the chairman is likely to come from prominent fundraisers on Wall Street."

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