William Donaldson is giving up a lot to become the new chairman of the
Securities and Exchange Commission
Donaldson, nominated by President Bush to succeed Harvey Pitt, is promising to sell millions of dollars in stocks and investments in a half-dozen private equity funds, in order to avoid a conflict of interest in his new job. Donaldson made that vow as the White House was releasing his 34-page financial disclosure statement, in advance of a confirmation hearing by the Senate Banking Committee.
The Donaldson nomination has been for the most part welcomed on Wall Street and on Capitol Hill. But some have criticized it, saying Donaldson is too much of a Wall Street insider to revive investor confidence in the stock market. Others say Donaldson, 72, is too close to the president, noting that he is a longtime family friend.
The financial disclosure reinforces the image of Donaldson as a cagey Wall Street veteran with his money invested in a cross-section of corporate America. He currently owns stocks in dozens of major companies, including
In some instances, Donaldson's stock holdings are substantial. For instance, he owns at least $250,000 worth of stock in Anheuser-Busch,
, Cisco, Halliburton and Tyco -- the troubled conglomerate that saw its stock get clobbered last year. Halliburton is the oil services company that Vice President Dick Cheney ran in the late 1990s.
Donaldson also receives monthly pension checks from Aetna and the
New York Stock Exchange
, where he served as chairman in the early 1990s.
But much of Donaldson's money is invested in hundreds of little-known technology, energy, real estate and pharmaceutical companies through his investment in a series of private equity funds. Most of those private funds were ventures established by
Donaldson Lufkin & Jenrette
-- the Wall Street investment bank that Donaldson cofounded in 1959 with two Harvard School of Business classmates. In November 2000, DLJ merged with
Credit Suisse First Boston
These DLJ funds, which are open to Wall Street's top brass as well as major institutional investors, for the most part keep their holdings private. DLJ and CSFB have rarely disclosed the holdings in these funds, except to say that they often have invested in companies that were either current or potential clients.
In some cases, these DLJ private equity funds are substantial. DLJ Merchant Banking Partners II, a fund that Donaldson has an interest in, has more than $4 billion in assets, according to a CSFB spokeswoman.
In all, Donaldson reported earning $133,500 in income from these private partnerships, which invested in everything from struggling startups to now bankrupt enterprises.
Some of the holdings in the DLJ funds include shares in the New York-based drug store chain
, wireless communications company
, networking company
New Power Co.
-- a bankrupt power company that
spun off in November 2000 in an initial public offering.
The New Power IPO was jointly led by DLJ and CSFB. Both DLJ and CSFB were two of Enron's primary investment bankers, back in the days before the energy-trading firm imploded in a corporate accounting scandal.
Donaldson, after leaving the NYSE in 1994, returned to DLJ as a senior adviser before leaving again to take over the helm of Aetna.