The Yale University School of Management announced the death of its founding dean, former Securities and Exchange Commission chairman Wiliam Donaldson, at 93.
In a statement published Friday (June 14), Donaldson died on Wednesday (June 12) but fell short of explaining the cause.
He was the SEC chief during the George W. Bush administration, and a career highlight was the organization's crackdown on corporate misdeeds from 2003 to 2005.
Prior to the SEC, he was the cofounder of Donaldson Lufkin & Jenrette (DLJ), the first New York Stock Exchange (NYSE) member to go public. He also became an undersecretary of state in the Nixon administration and headed the NYSE.
From Investment Banker to Fraud-Buster
William Henry Donaldson was born on June 2, 1931. He was raised during the Great Depression and recalled that his father struggled the rest of his life recovering from the closing of his automobile casting shop, which had opened in the late 1920s.
He attended Yale University, where he befriended George HW Bush's brother Jonathan and eventually was admitted to the university's secret society, Skull & Bones.
He graduated from Yale with a degree in American studies and eventually served as an infantry officer in the United States Marine Corps from 1953 to 1955. Although he had never seen combat in Korea, he was stationed there to command a rifle platoon. He also had tours in Japan and Hawaii before leaving the Marines for Wall Street.
Donaldson joined the investment firm GH Walker & Co. as a senior partner for George Herbert Walker, the uncle of the first President Bush. He left the firm to obtain an MBA at Harvard Business School in 1958, then returned to work on mergers and acquisitions.
He eventually formed DLJ with Yale classmate Dan Lufkin and Harvard alumnus Richard Jenrette in 1959 to innovate how mutual funds and institutional investors work.
Donaldson left DLJ to join the Nixon administration as a diplomatic official under Secretary of State Henry Kissinger and as an advisor for Vice President Nelson Rockefeller during the Ford administration.
He returned to Yale in 1975 to become the founding dean of its School of Management, a position he held until 1980. Then, he returned to Wall Street to establish his own private investment firm, Donaldson Enterprises.
Donaldson eventually headed the NYSE from 1991 to 1995 before returning to DLJ as a senior adviser. DLJ was then acquired by Credit Suisse Group AG in 2000 for $13.4 billion.
He was then named chairman and CEO of Aetna, a US health insurer. In his 13 months on the job, he oversaw the company's financial services and international units to ING Groep for $7.7 billion to consolidate its focus on health care.
Bloomberg reported that Donaldson was put at the helm of the SEC by the second President Bush for his expertise in business. In his 28 months on the job, he defied analysts' expectations by implementing policies to restore confidence in corporate America following a string of fraud issues, including the bankruptcy of Enron in 2001 and WorldCom in 2002.
William SEC Legacy
He also became politically controversial after he jumped party lines to join the commission's two Democrats, Harvey Goldschmid and Roel Campos, to approve regulations that eventually drew opposition from the business world and lawmakers on Capitol Hill.
The policy required hedge fund managers to register with and be examined by the SEC, mutual fund boards led by chairs independent of executive management, and electronic stock trades redirected to the exchange offering the best price.
The only abandoned Donaldson initiative was the effort to make it easier for shareholders to elect candidates to corporate boards, which faced opposition from business groups and the White House itself at the time.
However, after Donaldson stepped down, courts struck down the rules on independent chairs of mutual funds and the registration of hedge funds.
He was also at odds with Republican Party commissioners Paul Atkins and Cynthia Glassman over their opposition to imposing multi-million dollar fines against public companies that commit fraud, misrepresentation, and accounting violations.
Reuters reported that Donaldson is survived by his second wife, Jane Phillips, and their son Adam, two other children from his first wife, Evan Burger, who died in 1994, and three grandsons.
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