An SEC announcement late Tuesday says, "The Securities and Exchange Commission announced Tuesday that Andrew J. 'Buddy' Donohue plans to leave the SEC in November after serving more than four years as its Director of the Division of Investment Management." The Division of Investment Management overseas the regulation of mutual funds and money market mutual funds. Donohue has led the group during a period of unprecedented change. His expertise and leadership will be missed, though his speculation about the possibility of a $10.00 a share and floating rate money fund likely will not be.
The SEC's release says, "Mr. Donohue helped develop significant regulations governing the $39 trillion asset management industry, including investor-oriented rules to improve oversight of money market funds, increase investment adviser custody controls, and curtail investment adviser 'pay-to-play' abuses. Under his leadership, the SEC also implemented a new mutual fund summary prospectus and investment adviser disclosure brochure, and proposed to replace rule 12b-1 mutual fund distribution fees with a reformed regulatory framework. The agency also recently proposed rule amendments to improve information in target date fund advertisements and marketing."
SEC Chairman Mary Schapiro comments, "Buddy has been an effective leader and investor advocate during his tenure at the Commission. His vast knowledge of mutual funds and the investment advisory landscape has been invaluable in advancing several vital regulatory initiatives. We are grateful for his practical insights and innovative guidance, and thank him for his tremendous commitment to public service."
Donohue said, "It has been a privilege to work with so many dedicated and talented staff members throughout the agency who have contributed to the development of important new rules in the investment management area. I will forever value my time at the Commission and its remarkable mission that I feel fortunate to have been a part of."
The release adds, "Mr. Donohue, 59, was appointed to lead the Division of Investment Management in April 2006. He came to the SEC from Merrill Lynch Investment Managers, where he served as Global General Counsel and oversaw the firm's legal and regulatory compliance functions for more than $500 billion in assets including mutual funds, fixed income funds, hedge funds, private equities, and managed futures. He also was Chairman of the firm's Global Risk Oversight Committee."
While extremely knowledgeable and a strong supporter of money funds, Donohue dismayed many in the business with recent comments about possible structural changes to money funds. Our Crane Data April 7, 2009, News, "SEC's Donohue Floats $10, Floating NAV for Money Market Funds", quoted him, "Many assert that the stable $1.00 NAV has been important to the development and popularity of money market funds. While the popularity of the stable $1.00 NAV is understandable, it does present certain potential drawbacks to investors.... These problems could be addressed by the adoption of a $10.00 NAV or a floating NAV. I believe these important issues must be considered when approaching money market fund reform." (This was from a "Keynote Address at the Practising Law Institute's Investment Management Institute 2009".)
Our Dec. 17, 2008, News, "SEC's Donohue: Money Fund Model, Regulatory Regime Review on Tap", quoted Donohue, "It is essential that we take the experience of money market funds from the last several months and draw from it to consider important lessons. For instance, money market funds have twin goals of providing liquidity, typically on a same-day basis, and preserving capital to maintain a stable net asset value of $1.00. At times these goals can conflict." (This is from his "2008: Important Accomplishments, Meaningful Lessons and Getting Back to Basics" at the ICI 2008 Securities Law Developments Conference.)
