Senate Democrats are reviewing the leadership of William H. Donaldson, nominated to be Securities and Exchange Commission chairman, at the New York Stock Exchange when floor brokers made millions of dollars in illegal trades.

President Bush last month named the Wall Street veteran to the job as part of his revamped economic team ahead of the 2004 election campaign.

A confirmation hearing for Donaldson, an investment banker and brokerage firm founder with ties to the Bush family, is set for Feb. 5.

Donaldson, with estimated assets of between $89 million and $253 million, is promising to sell off stocks he owns in more than 50 corporations and his shares in partnerships to avoid any potential conflict of interest.

"Public service is very important to Mr. Donaldson and he has decided to take these steps to eliminate even any appearance of conflicts of interest," White House spokeswoman Ashley Snee said Wednesday after his financial disclosure report was released.

Donaldson's biggest single holding is $25 million to $50 million in Treasury bonds, the report shows. He would become -- along with Treasury secretary nominee John Snow -- one of the wealthiest members of Bush's Cabinet. He would earn $142,500 a year as SEC chairman.

Donaldson, who was chairman of insurance giant Aetna Inc. for about a year, also has undertaken to sell his Aetna stock options worth $5 million to $25 million, in addition to regular shares worth $50,000 to $100,000.

The exact value of his assets could not be determined from the financial forms because they only require values to be provided in ranges.

Donaldson was NYSE chairman during the trading fraud scandal of the early 1990s, which later resulted in the first criminal prosecutions of floor brokers at the nation's largest stock exchange.

"It's a serious issue," Peg O'Hara, managing director of the Council of Institutional Investors, said Wednesday. "I hope it gets a good airing" at Donaldson's Senate hearing.

"It's imperative that we get a strong investor-protection person to head the SEC," said O'Hara, whose group represents mutual funds, pension funds and other big investors.

Democrats on the Banking Committee "are looking at his entire record," said Jesse Jacobs, a spokesman for the committee's senior Democrat, Sen. Paul Sarbanes of Maryland.

That includes the trading scandal and Donaldson's role, according to a government source who spoke on condition of anonymity. Inclusion of the issue by the Democrats was first reported in Wednesday's editions of The Washington Post.

Donaldson and other senior NYSE officials are said to have quietly approved the practice of allowing brokers working on the exchange floor to trade and share in profits with private customers.

A federal judge in 1999 blamed the stock exchange for what he termed "downright anorexic" enforcement of a prohibition against floor brokers trading accounts in which they hold an interest. The judge admonished the NYSE for failing to enforce the securities laws and its own rules meant to prevent the brokers from getting an unfair advantage over other investors.

Seven defendants in the case, including five floor brokers, pleaded guilty to federal charges that they conspired to violate securities laws by arranging for the brokers to make $15 million in profits by taking advantage of their inside jobs to get a jump on the average investor.

White House spokeswoman Claire Buchan, who has been fielding questions on Donaldson since his selection by Bush, on Wednesday defended his record of enforcement at the exchange.

"We believe Bill Donaldson has an outstanding record of oversight and enforcement and that he's the right person to chair the SEC," she said.

Donaldson is expected to win Senate approval, and several Senate Democrats have praised him.

The new chairman faces the task of restoring investor confidence shaken by last year's corporate scandals and of leading a watchdog agency in disarray. The outgoing SEC chief, Harvey Pitt, resigned under pressure in early November after a series of political missteps that embarrassed the Bush White House.

Several groups, including the Gray Panthers, announced plans for a demonstration Thursday outside the SEC's Washington headquarters -- featuring a giant inflatable "corporate" pig -- to protest what they said is the influence of industry lobbyists on the agency's actions.

Pitt, in his final speech as SEC chairman Wednesday, called the agency's new regulations "sound and thoughtful rules ... to ensure that investors and our markets have more protection."