In a surprise move, Securities and Exchange Commission Chairman William Donaldson said late Wednesday that he will step down on June 30 after two and a half years at the helm, prompting President Bush to nominate California Rep. Christopher Cox, a Republican, as his replacement.
Due to the wave of corporate scandal that has pervaded Wall Street, Donaldson pushed through more stringent rules governing mutual funds, hedge funds and stock trading and pricing. This came as a surprise to many in the money management industry, as Donaldson's record initially indicated that he might espouse their views, rather than those of regulation-oriented lobby groups.
Donaldson's replacement chairs the House Homeland Security Committee and was elected to Congress in 1988 from California's Orange County. As an elected official, the 52-year-old Cox has championed repealing the estate tax, the capital gains tax on savings and investment and taxes on dividends.
The SEC took a lot of flack for being behind the eight ball on the market-timing and late-trading scandals that roiled the mutual fund business, which ultimately served as a catalyst for many of the reforms the agency promulgated.
Given the reforms put forth during this tumultuous period, it "may well be remembered as the most consequential and productive period in the Commission's history," Donaldson said in a prepared statement.
"I have been honored to serve as chairman," he continued. "Although there will always be more work to be done to preserve and enhance the integrity and strength of our nation's corporations and markets, I believe the time has come for me to step down and return to the private sector and my family."
Donaldson's resignation comes on the heels of the anticipated departure later this summer of SEC Commissioner Harvey Goldschmid, who plans to step down in July or August.
Goldschmid and Donaldson have largely set the SEC's reform agenda over the past two years, which drew repeated criticism from Republican Commissioners Cynthia Glassman and Paul Atkins, along with some high-profile members of the asset management community.
"Under Chairman Donaldson, the Commission undertook comprehensive reform aimed at protecting fund investors and bolstering their confidence in fund investing as a vital tool to achieve their long-term financial goals," said Investment Company Institute President Paul Schott Stevens.
"The Institute, which has supported the majority of the reforms developed during his tenure," Stevens continued, "pledges itself to continuing to work constructively with the Commission's future leadership."
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