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| 2003
News and Press Releases |
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HEADLINE:
New Sheriff On Wall Street
NYTimes.com. May 13, 2003
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EXCERPT: He has been at the helm of the Securities and Exchange Commission for only three months, but William Donaldson has given individual investors reason to believe that he will prove to be an effective champion of their interests as a vigilant regulator of the nation's financial markets. The challenges ahead remain daunting, but Mr. Donaldson is steadily restoring the agency's credibility in the wake of its disastrous stewardship by Harvey Pitt. The S.E.C. chairman passed his first big test by persuading William McDonough, the respected president of the New York Federal Reserve, to run the new accounting oversight board created by Congress last summer. He has also opened an important inquiry into trading practices at the New York Stock Exchange. The commission has issued rules to tighten corporate boards' oversight over financial audits. Mr. Donaldson should now see that more is done to shore up shareholder democracy.
A reassuring sign that there is a new sheriff on Wall Street came in the aftermath of the recently announced landmark settlement with 10 brokerage firms over their tainted stock research. The S.E.C. chairman sternly rebuked Philip Purcell, the chief executive of Morgan Stanley, for trying to minimize the extent of his firm's involvement in the scandals. Mr. Donaldson, a former Wall Street banker himself, wrote a letter to Mr. Purcell describing concern over his "troubling lack of contrition," and reminding him that Morgan could face further legal problems if it denied the settled charges. Besides being unusual, Mr. Donaldson's move was a powerful use of his office's bully pulpit. With all the talk about whether the S.E.C. has enough material resources to pursue corporate malfeasance - the agency's budget is being increased significantly - it was easy in the Harvey Pitt era to forget that a strong S.E.C. chairman can wield a great deal of moral authority. This is especially true given financial institutions' absolute need to retain public trust.
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