X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
President George W. Bush has selected William H. Donaldson, a co-founder of investment bank Donaldson, Lufkin & Jenrette Inc., to chair the Securities and Exchange Commission, replacing Harvey Pitt, who resigned last month. Donaldson’s mission will be “to vigorously enforce our nation’s laws against corporate corruption,” Bush said in an announcement at the White House Tuesday. Donaldson, 71, said he is up to the challenge. “It’s time for all of us to pull up our socks,” he said standing beside Bush. “Confidence in the U.S. corporate and financial industries has been seriously eroded during the past few years. Let me just simply say that I am firmly committed to doing everything that I can do to restore the confidence of investors in the U.S. corporate and financial industry.” Donaldson comes to the agency at a particularly rocky time. The SEC is conducting a record number of investigations — more than 600 — in the wake of a painful decline in the stock market and a rash of accounting scandals. To ease the agency’s workload, the president said he would propose funding for the SEC’s 2004 budget year of between $800 million and $850 million, or double the agency’s budget in 2002. Pitt, who left a partnership with New York-based Fried Frank Harris Shriver & Jacobson to join the SEC, drew criticism throughout his 15-month tenure for his close ties to the accounting industry and a series of public gaffes. He resigned last month on Election Day, when it was discovered he had withheld important information from the other commissioners on a candidate for a newly created accounting oversight board. The announcement of Donaldson’s nomination came as something of a surprise. His name surfaced only occasionally during the last few weeks’ speculation over who would succeed Pitt as chairman of the beleaguered agency. Still, securities lawyers praised the selection. “If one were to design a template for a choice to run the SEC, Mr. Donaldson would fit it perfectly,” said Barry Barbash, a partner in the Washington, D.C., office of Shearman & Sterling and former director of the SEC’s division of investment management. “Wall Street will be happy and investors will be happy,” Barbash said. “With someone of his stature, morale [at the SEC] has to improve.” “I think he’s a great choice,” said Michael King, a partner at New York-based Weil Gotshal & Manges. “You need someone like him who’s a good communicator because the big job is going to be to try to reverse the cynicism [toward Wall Street], particularly among the small investors.” Donaldson brings an impressive set of credentials to the job. A former chairman and chief executive of the New York Stock Exchange, he started his career on Wall Street in 1958, after earning an MBA at Harvard University. His first job was at the brokerage house G.H. Walker & Co., headed by former President George H.W. Bush’s uncle Herbert Walker. In 1959, he founded Donaldson, Lufkin & Jenrette with classmates Dan Lufkin and Richard Jenrette, with a focus on stock research. The firm later expanded into investment banking and other financial services. It was bought by Credit Suisse First Boston in 2000 for $13.4 billion. Donaldson also served as the first dean of the Yale School of Management for five years starting in 1975. Before that, he was undersecretary of State to Henry Kissinger from 1973 to 1975. Most recently, he was chairman and chief executive of Aetna Inc., the nation’s largest health insurer from 2000 to 2001. He stepped down after directing the sale of Aetna’s financial services and international units to ING Group for $7.7 billion. He now heads his own Manhattan-based firm, Donaldson Enterprises, which he started in 1981. Donaldson is known for his frank and colorful remarks. Shortly before he became chairman of the NYSE, he described the great bull market of the 1980s as a “somewhat ribald party” that left the securities industry with a severe hangover. Although his nomination must be confirmed by the Senate, if early indications are correct, he will not meet with much resistance. Donaldson is the “right antidote,” Sen. Charles Schumer, D-NY, a member of the Senate Banking Committee, said in a statement. “The SEC desperately needs someone who both has a deep knowledge of how the markets function and at the same time possesses a rock-ribbed integrity. Bill Donaldson is such a man,” said Schumer, who was one of several senators who had called for Pitt’s resignation. President Bush selected Donaldson one day after he tapped railroad executive John Snow to replace Treasury Secretary Paul O’Neill. White House economic adviser Larry Lindsey, also dismissed in the widely anticipated economic purge, is expected to be replaced by Stephen Friedman, former co-CEO of Goldman Sachs & Co., although a final decision on that position is still pending.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.