On December 10, 2002 President George W. Bush nominated William H. Donaldson to serve as the chairman of the Securities and Exchange Commission (“SEC”).  Dan Lufkin, who is Mr. Donaldson’s close personal friend and business partner, discussed Mr. Donaldson’s nomination during a cable television interview. The interview focused on Mr. Lufkin’s opinion concerning Mr. Donaldson’s qualifications to be SEC Chairman.

Mr. Lufkin was asked whether an investor advocate might be a more appropriate selection to lead the SEC rather than a Wall Street insider.  A transcript of Mr. Lufkin’s response was not immediately available.  Of course Mr. Lufkin defended the decision to nominate a Wall Street insider.  This was not a surprise.  After all he had offered himself as a public commentator and he is Mr. Donaldson’s long-time business partner.  However Mr. Lufkin went further.  He stated that an investor advocate would be a less attractive SEC Chairman.  He explained that such a single–constituent focused nominee would not be as good as Mr. Donaldson.  Asensio & Company, Inc. suggests Americans ask themselves two questions: Is it not the number one job, and in fact the supposed sole intent of the SEC, to be “The Investor’s Advocate?”  Why would a Wall Street insider be less single-sided than an investor advocate?

Asensio & Company, Inc. believes that the following are essential elements in any plan to improve the freedom and fairness of U.S. capital markets: 1.) decentralize the SEC’s Enforcement authority away from its politically-appointed, Washington, D.C. based Commissioners to the Chief Enforcement Officer at its local branches; 2.) eliminate the regulatory bias against investors who oppose Wall Street’s unreasonable stock schemes (these include the up-tick restrictions, the stock borrowing requirement and the exclusion of short sellers from the protections granted to other investors under the anti-fraud provisions of securities laws); 3.) establish listing requirements that prevent public companies from filing frivolous lawsuits against analysts, media or other public commentators who criticize its management or have opposing opinions concerning the value of its publicly traded securities.