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Senate Panel Backs Donaldson for SEC Top Post

By Reuters
Published | Updated

WASHINGTON – The Senate Banking Committee Tuesday backed confirmation of investment banker William Donaldson as the next chairman of the market-regulating Securities and Exchange Commission.

Donaldson's nomination must still be approved by the full Senate, which is expected to vote sometime this week.

The committee held a voice vote on Donaldson ahead of hearing testimony on the economy from Federal Reserve Chairman Alan Greenspan.

"He'll face a daunting task as the new chairman of the SEC," said Maryland Sen. Paul Sarbanes, the ranking Democrat on the Republican-led committee.

"He must address the challenge of restoring confidence to the capital markets," said Sarbanes, co-author of the Sarbanes-Oxley law produced by Congress last year in response to a spate of corporate scandals that included Enron Corp. and WorldCom Inc.

Donaldson, a former chairman of the New York Stock Exchange, would succeed departing SEC Chairman Harvey Pitt.

Pitt resigned in November amid controversy over his handling of the establishment of a national accounting oversight board. Pitt has continued to work at the SEC since tendering his resignation to President Bush.

Donaldson testified to the Banking Committee last week that his No. 1 priority if he is approved would be to find a chief for the Public Company Accounting Oversight Board.

Still in its organizational stages, the accounting board has had no permanent chairman since its first head, former CIA Director William Webster, stepped down shortly after Pitt did.

Donaldson, an ex-Marine, co-founded Donaldson Lufkin & Jenrette in 1959. Until 1973, he was chairman and chief executive of the firm, known as a pioneer of investment research. From 1991 to 1995 he was chairman of the NYSE.

During a 14-month stint in 2000 and 2001 as head of health-care insurance giant Aetna Inc., Donaldson was named in a shareholder lawsuit against the company alleging that investors were misled about the true cost of a company restructuring.

Donaldson told the committee last week that the lawsuit arose from a corporate "hiccup" that was properly handled.