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SEC Chairman Donaldson Leaving Post


William Donaldson announced today that he will step down as chairman of the Securities and Exchange Commission on June 30th. There's no word yet on who might replace him. Donaldson took over as chairman at a time when investor confidence was badly shaken by a series of big corporate scandals. And he was widely seen as an aggressive advocate of more stringent regulation and reform in the financial markets. NPR's Jim Zarroli joins us now.

Jim, did Donaldson give any reason for his departure?

JIM ZARROLI reporting:

Well, he held a press conference this afternoon. He said he wants to spend more time with his family, return to the private sector. A lot of reporters were skeptical about that because Donaldson has really ruffled a lot of feathers since he took over as chairman. You know, when he came in, a lot of people wondered whether he would really be tough enough on corporate wrongdoing. He is a real establishment figure. He's former chairman of the New York Stock Exchange, former head of Aetna. He headed an investment bank. But it is safe to say he really surprised a lot of people by pushing reforms in many areas. There were a lot of people in the business world who thought he went too far. Donaldson said today, you know, any disagreements he had with people played no part in his decision to leave. And, you know, that may well be. He turns 74 tomorrow. He was never really expected to stay on the job a long time. So maybe it's not a surprise he's leaving.

NORRIS: Well, Jim, as you say, he was a very aggressive chairman. What were some of the reforms he advocated, and what do you think his legacy might be?

ZARROLI: Well, first and foremost, he really pushed the Sarbanes-Oxley bill, which imposed a whole set of new guidelines on the way publicly traded companies are run, the way they select their board members, the way they're audited. This is very unpopular with a lot of companies who say it's been very onerous, very expensive.

Donaldson has also been very active in the regulation of mutual funds. You know, it was New York Attorney General Eliot Spitzer who first drew attention to some of the unsavory things that were taking place in the mutual fund world. But it was Donaldson who came in later and sort of shepherded through a lot of changes in the way the industry's regulated, changes aimed at, for instance, removing conflicts of interests in the running of funds. People don't know this, in part, because Donaldson's personal style is very modest and sort of unthreatening, unlike Eliot Spitzer, who comes off as, you know, much more dynamic and direct. But if you talk to corporate governance people, they give William Donaldson a lot of credit for cleaning up the mutual fund industry.

NORRIS: Has there been much speculation on who might replace him?

ZARROLI: Yeah. Well, there always is. There are names being floated around. The former head of enforcement at the SEC, Richard Walker, is one. A lot of people are going to be watching this very closely to see who does get named. Donaldson is a Republican, but he very often sided with the two Democrats on the commission and against the two Republicans. For instance, just this year the commission approved a very controversial package of changes in the way the stock markets are run. The final vote was 3-to-2. If Donaldson had voted the other way, the reforms wouldn't have passed. So if you get a chairman who's more inclined to side with the Republicans, it's going to really change the balance considerably.

And there's a lot of pressure now to turn back some of the reforms and the shareholder protections that the SEC has passed, especially those having to do with Sarbanes-Oxley. Donaldson says there's still a lot more to do. For instance, he wants to regulate hedge funds more, but that's going to have to happen under somebody else's watch.

NORRIS: Thank you, Jim.

ZARROLI: You're welcome.

NORRIS: NPR's Jim Zarroli. Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.
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