- The Washington Times - Wednesday, June 1, 2005

Securities and Exchange Commission Chairman William Donaldson, appointed by President Bush to restore confidence in a stock market shaken by corporate scandals, announced his resignation yesterday.

Mr. Donaldson, who turns 74 today, said he will leave by the end of the month. He was considered one of the most activist chairmen in the history of the regulatory agency. Mr. Donaldson said he believed “the time has come for me to step down and return to the private sector and my family.”

He did not speculate on who might succeed him.

In a brief statement, Mr. Donaldson said that a great deal had been done over the past 2 years to restore the confidence of investors and that the period may well be remembered as “the most consequential period in the commission’s history since its founding in 1934.”

Mr. Donaldson oversaw implementation of the 2002 Sarbanes-Oxley Act, which Congress passed in response to a wave of scandals. The law restructured and tightened regulations governing American corporations to make them more accountable to shareholders.

Mr. Donaldson, a former head of the New York Stock Exchange, took over at the SEC in February 2003 after the resignation of Harvey Pitt, Mr. Bush’s embattled first choice as SEC chairman.

Mr. Donaldson moved quickly to oversee various SEC investigations into corporate wrongdoing on Wall Street, but during his tenure he also came under fire for pursuing what some business interests saw as an overly aggressive regulatory agenda.

“He was a strong enforcer and an independent — a free spirit, if there is such a thing for a regulator,” said Paul R. Brown, professor of accounting at the New York University Stern School of Business.

“His array of activities have been impressive and good for investors, but they have not been the traditional conservative Republican-based positions,” Mr. Brown said.

Many of the rule changes pushed by Mr. Donaldson were passed by 3-2 votes, and he was asked at a press conference if he had concerns that some might be rolled back.

“I hope there will be no legalistic rollback of any of these key items that we have put forward,” he said.

Mr. Donaldson last month won SEC approval for a controversial plan to overhaul stock trading. The plan won approval over the objections of fellow Republican commissioners with Mr. Donaldson siding with the two Democrats on the commission.

Under the proposal, known as the “trade-through” rule, stock brokers will be required to accept the best quoted price for any transaction, no matter which market it came from.

The trade-through rule isn’t due to take effect until 2006 and most observers said the SEC would likely revisit the issue should Mr. Bush appoint a more pro-business official to take Mr. Donaldson’s post.

“This is a presidential appointment and, sure, it could go either way,” Mr. Brown said. “But I do think the administration clearly has recognized that Donaldson hasn’t come down on the side of his Republican colleagues.”

Before joining the SEC, Mr. Donaldson had a distinguished 45-year career at the heights of corporate America. He served as head of the New York Stock Exchange, Aetna Inc., and the investment banking firm Donaldson, Lufkin and Jenrette, which he co-founded.

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