SEC Chairman William Donaldson Calls it Quits; SEC has had Increasingly Bigger Impact on CUs

WASHINGTON – Expressing his desire to return to the private sector and his family, SEC Chairman William Donaldson announced on June 1 he will step down from his post on June 30. In a statement, Donaldson said “I have been honored to serve as Chairman. 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.” President Bush appointed Donaldson the SEC’s Chairman in 2003. Donaldson called his nearly three-year tenure as “the most consequential and productive period in the Commission’s history since its founding in 1934.” His announcement follows several recent departures from the SEC. Stephen Cutler, director of the division and enforcement, and Paul Roye, director of the division of investment management have both recently resigned to return to the private sector. Under Donaldson’s watch, the largest receivership in SEC’s history that impacted more than 200 credit unions was made. Bentley Financial Services, a defunct broker-dealer, obtained more than $370 million in investments from credit unions, banks and individuals among others through the sale of uninsured securities under the guise of federally-insured certificates of deposit. In March, Robert F. Bentley, pleaded guilty to two counts of wire fraud and one count of bank bribery and is now facing a $3.25 million fine and up to 35 years in prison. Credit unions were among those that have received more than $314 million back from Bentley’s assets through a court-appointed receiver. Both CUNA and NAFCU have submitted comment letters on several SEC proposals during Donaldson’s tenure including submitting feedback on Regulation B, which would include extending exemptions to credit unions such as engaging in third-party networking, sweep accounts and trust and fiduciary services without having to register with the SEC. For more than three years, the CUNA Brokerage Activities Task Force has been working with the SEC on securities-related concerns. NCUA, a number of credit unions and industry firms have generally supported all of the exemptions. “We certainly wish him well in his new endeavors,” said Rebecca Somers, NAFCU public relations manager. House Financial Services Committee Chairman Michael Oxley (R-Ohio) said, “As Chairman of the SEC during one of the most tumultuous and dynamic times in the Commission’s history, (Donaldson) has been a tireless advocate for investor protection. He will be remembered well for helping to restore investor confidence in the markets.” At a June 1 afternoon press conference, Donaldson emphasized his reasons for stepping down as strictly personal. “Any disagreement that we’ve had on the Commission, had nothing to do with my decision to resign,” Donaldson said. “As long as I thought I was accomplishing things, I was going to stick around. I believe the time has come for me to drift off into the private sector.” He pointed to several SEC accomplishments including regulation of the trillion dollar hedge fund industry, mutual fund industry reforms and reshaping the SEC’s managerial structure including adding a tougher risk management program. At press time, no one had been named to replace Donaldson. [email protected]