(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Senate Confirms Donaldson as SEC Chairman

The Senate confirmed William H. Donaldson to replace Harvey L. Pitt as chairman of the Securities and Exchange Commission. Mr. Donaldson co-founded the investment banking firm Donaldson Lufkin & Jenrette in 1959 and was the firm's chairman and chief executive. He was chairman and CEO of the New York Stock Exchange from 1990 to 1995 and was chairman of Aetna Inc. from 2000 to 2001. He succeeds Mr. Pitt, who had served as chairman since August 2001.

Mr. Donaldson's tenure begins as the SEC is winding up a very busy period of rulemaking to implement the legislative reform of the corporate reporting and auditing system enacted in the Sarbanes-Oxley Act. Mr. Donaldson had previously said that one of his goals is to take a careful look at the ratings agencies, and to work to prevent the "balkanization" of the nation's securities laws, which he fears could happen if too many states pass their own set of securities laws.

In a recent letter to Mr. Donaldson, Michael G. Oxley, the chairman of the House Financial Services Committee, urged him to make mutual fund shareholder protection one of his priorities and to extend the transparency that the Sarbanes-Oxley Act established for corporations to mutual funds. The SEC has already approved a recent final rule to require investment companies to disclose how they vote their proxies, despite opposition from the industry. The letter also urged Mr. Donaldson to insure that securities are primarily regulated at the federal level, noting his concerns over balkanization, and to work to insure that the SEC is able to maintain adequate staffing levels.

The president of the Securities Industry Association, Marc E. Lackritz, stated that Mr. Donaldson "will be an outstanding SEC chairman." He added that the chairman "has what it takes to guide the SEC effectively in helping rebuild the public's trust and confidence in our capital markets and we urge the Congress to give Chairman Donaldson the resources the commission needs to do the job effectively."