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SEC Chairman, William Donaldson, took over as SEC boss during difficult times and was expected to do some heavy lifting. What Donaldson didn’t understand was that his heavy lifting was supposed to lift stock prices into orbit, not overhaul the financial markets to actually benefit the average investor.
Although Donaldson simply followed the Sarbanes-Oxley plan early on during his reign, he soon began to thrive outside of S-O’s confines. To be sure, after the mutual fund scandals (which Spitzer, not the SEC, broke), Donaldson didn’t have to try and push through tough new oversight rules. But he did. For that matter, Donaldson didn’t have to go after the regulator’s Holy Grail that is hedge fund regulation. But he did.
Or did he?
Deep Throat Speaks
My source says that President Bush, who is growing increasingly irritated by his failed Social Security plan, placed a call to Donaldson a few weeks ago and said ‘sorry old friend, your work here is done’. Moments later Bush called Christopher Cox and said ‘make corporate America happy and clean up Donaldson’s mess.’
Same Voice of Nonsense
Mr. Glassman – who deep throat says is paid off - says that Cox should change nearly everything that Donaldson helped accomplish. Moreover, Glassman argues that Cox should review Sarbanes-Oxley, rein in FASB (who under Herz is doing a decent job), and give more speeches. On this last point one would think that Mr. Glassman is joking. Sadly he was not:
“Unlike his predecessor, Arthur Levitt, a Democrat, Donaldson failed to make investor education a high priority. Levitt held dozens of popular Town Meetings -- a practice that Cox should resume.” An Inspired Choice
To begin with Mr. Glassman, Donaldson’s predecessor was the disgraced Harvey Pitt. As for Arthur Levitt, besides delivering fantastic speeches warning of the dangers of investing, Levitt accomplished little over nearly a decade at the SEC helm. Indeed, Levitt himself left with many regrets, including his primary regret of not getting stock options expensed (something Glassman is against).
Suffice to say, Mr. Glassman’s entire opinion on Donaldson, Levitt, and the anti-investor Cox is the exact opposite of what common sense would dictate. Note the SEC’s mission Mr. Glassman:
“The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets.” SEC.gov
Did He, Really?
Stock options are an expense, there needs to be more hedge fund transparency, and Regulation NMS would have eventually help level the stock trading playing field. Suffice to say, most of Donaldson’s handiwork is beneficial to the common investor. It is a shame he didn’t stick around long enough to see his creations through.
Now deep throat says that Cox will ask the SEC to study the stock options issue further before implementation. Deep throat also says that Cox will scrap Regulation NMS, and may even try to delay hedge fund registration. Finally, deap throat informs me that Bush expects some help from businesses, exchanges, and Wall Street in pushing his Social Security plan now that Donaldson is out of the way.
30-years from now deep throat may be compelled to come forward. Unfortunately no one is going care. Rather, despite his optimism and the fact that Donaldson really did try to make a difference, his triumphs will probably end up being failures.
“It may well be remembered as the most consequential and productive period in the Commission's history since its founding in 1934...” < |
