Senators Urge Speedy SEC Enforcement

U.S. senators, saying investor confidence remains weak, pressed Securities and Exchange Commission Chairman William H. Donaldson on Tuesday to speed up the agency’s enforcement and rulemaking actions.

Senate Banking Committee Chairman Richard C. Shelby (R-Ala.) and other members of the panel told the SEC chief that they expected fast responses to new controversies involving mutual funds, hedge funds and the New York Stock Exchange.

“It seems that people are cheating big time,” Shelby said. “I’m not sure they are paying the price for it.”

The Senate questioning of Donaldson signaled growing congressional impatience with the SEC’s pace in combating financial scandals, after Congress almost doubled the agency’s budget and passed the Sarbanes-Oxley corporate-governance law after bankruptcy filings by Enron Corp. and WorldCom Inc.

Donaldson said the agency had different timetables for different issues. Overall, he said, “We’re trying to act deliberately but not precipitously.”

Donaldson also addressed calls for the NYSE to separate its business and regulatory functions.

“I don’t think we should be too hasty to throw the baby out with the bathwater,” Donaldson said. “The stock exchange needs to come up with a governance structure that guarantees the independence of the regulatory aspect but somehow keeps its proximity” to the exchange’s business.