US President George W. Bush on Tuesday nominated senior Wall Street investment banker William Donaldson to be the new chairman of the US Securities and Exchange Commission amid persistent investor mistrust stemming from a year of corporate scandals.
Bush chose 71-year-old Donaldson to replace Harvey Pitt, who quit as SEC chairman on Nov. 5 after a series of gaffes, leaving the SEC leaderless and facing a crushing workload of investigations and market reforms mandated by Congress.
"Bill Donaldson will be a strong leader with a clear mission to vigorously enforce our nation's laws against corporate corruption and to uphold the highest standards of integrity in the securities markets," Bush said in an appearance at the White House, with Donaldson at his side.
PHOTO: REUTERS
In choosing Donaldson, the president turned to a fellow Yale graduate and establishment financier with a sterling reputation, who also faces a lawsuit related to his stint as chairman of health-care insurance giant Aetna Inc.
Donaldson -- an ex-Marine who now heads his own firm, Donaldson Enterprises based in New York -- co-founded the investment banking firm Donaldson Lufkin & Jenrette in 1959.
Until 1973, he was chairman and chief executive of the firm, known as a pioneer of investment research.
"I am firmly committed to doing everything that I can do to restore the confidence of investors in the US corporate and financial industry," Donaldson said following Bush's announcement.
"As my mother used to say many years ago, `It's time for all of us to pull up our socks,'" the banker added.
Donaldson's nomination ends weeks of speculation over replacing Pitt, whose rocky 15-month tenure spanned the Sept. 11 attacks that shut the markets and a wave of scandals that began with the collapse a year ago of Enron Corp.
Pitt, a former corporate lawyer and SEC staff lawyer, resigned amid controversy over his handling of appointments to a new national accounting oversight board.
His tenure was also dogged by charges that he remained sympathetic to the accounting industry he had represented as a private attorney.
Donaldson worked for about a year until April 2001 as chairman of Aetna, where he had been a board member for many years. The company, Donaldson and Aetna Chief Executive Officer John Rowe were named as defendants a year ago in lawsuits by Aetna shareholders alleging the defendants misrepresented cost savings involved in a 2001 company restructuring.
The suits alleged that after the restructuring, Aetna said unexpectedly high costs would cause it to miss earnings estimates, depressing the stock price and harming investors.
Donaldson and lawyers repre-senting the shareholders could not be reached for comment on the lawsuits.
An Aetna spokesman said: "Aetna believes that the suit has no merit. Aetna filed a motion to dismiss. Oral argument was heard on this and a decision is pending."
White House spokeswoman Claire Buchan said: "It's important that information be fully disclosed so that shareholders have timely information to make their investment decisions and Aetna has said in this matter that it made all relevant information available to its shareholders as soon as possible."
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