By stepping down as Chairman of the Securities and Exchange Commission, William H. Donaldson puts at risk the very reforms he fought for during his two-year tenure, BusinessWeek reports. Although a Republican, Donaldson ended up siding with Democrats over key issues such as mutual fund reform, hedge fund regulation and securities exchange modernization.

A new SEC chief who is more business-friendly than Donaldson proved to be is not likely to completely deconstruct the former Chairman's efforts but could take steps that would take the sting out of some of the new regulations.

"You won't see an 'open season' sign go up," one former top staffer said.

After all, "the SEC can't ever afford to be seen as not a tough enforcer," said Barry P. Barbash, the SEC's former top mutual fund regulator, himself now in the private sector.

The changes, more subtle, could entail delaying implementation of embattled mutual fund and hedge fund regulations, which are not slated to come into effect until later this year. The SEC may also elect to not vigorously defend the new regulations in the face of pending court battles.

Initiatives that were still on the drawing board, such as reform of executive pay, could remain only a theoretical exercise under the new regime.

Furthermore, the new Chairman will also select top staffers, including the head of investment management, a post that has not yet been permanently filled since Paul Roye's departure for the private sector.

Perhaps the most chilling effect could be on the enforcement division, now led by Linda Chatman Thomsen. Known as a tough regulatory cop with the Enron case already under her belt, without the support of a chief like Donaldson, she may feel pressured to cave in the face of Wall Street complaints that high fines primarily serve to further penalize shareholders who have already taken enormous hits.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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