May 15, 2006

SEC’s Glassman to leave, replacement unclear

By Kevin Drawbaugh

WASHINGTON (Reuters) - The longest-serving member of the
U.S. Securities and Exchange Commission plans to resign after
her term ends this summer, the SEC said on Monday.

Cynthia Glassman, a Republican economist who frequently has
urged the SEC to consider the costs of its rules, is serving a
term that began in 2002 and ends on June 5.

She could leave at that time, but no replacement for her is
waiting in the wings, said sources close to the SEC.

That raises two possibilities: she could stay on for a few
months, or the SEC could function with less than its full
complement of five members. Both have been done in the past.

"I suspect she will serve until a successor is confirmed in
order to avoid a stalemated two-to-two split," said Columbia
University Law School Professor John Coffee.

Glassman was on the losing side of controversial SEC votes,
along with Commissioner Paul Atkins, under the tenure of
previous Chairman William Donaldson. He was replaced in
mid-2005 by the present chairman, Christopher Cox.

"We'll probably get a commissioner Chairman Cox has chosen
or favors. I think he feels a need to build his own team. He's
been caught between two fairly polarized sides," said Coffee.

Glassman came to the lawyer-dominated SEC after working at
Big Four accounting firm Ernst & Young, for consulting firms
and for the Federal Reserve.

"She brought a unique perspective to the commission as an
economist. That was needed because the commission should look
at the costs and benefits of its rules," said Michael McCoy, a
former SEC staffer who is now with the law firm of Bryan Cave.

The Investment Company Institute, which represents mutual
fund advisers, said in a statement that Glassman has been "a
consistent and steady champion for the individual investor."

Most SEC votes are unanimous and Glassman agreed with her
colleagues on the majority of decisions she was involved in.

But she was in the 3-2 minority on three fractious
occasions: when the SEC voted for new stock market trading and
pricing rules; when it voted for new rules forcing hedge fund
advisers to register with the SEC; and when she opposed an SEC
order requiring that mutual fund board chairmen and
three-quarters of directors be independent of fund managers.

"She was, along with Commissioner Atkins, frequently a
critic of some of the recent rule-making. She felt that some of
the costs weren't worth the benefit," McCoy said.

The SEC has five commissioners appointed by the president
and approved by the Senate. Their terms last five years and are
staggered, with one term ending each year. No more than three
commissioners can belong to the same political party.

Cox, Atkins and Glassman are Republicans, while
commissioners Roel Campos and Annette Nazareth are Democrats.