With a year spent trying unsuccessfully to get the venture off the ground, the Securities and Exchange Commission's investor-education fund is losing its chairman and several directors, the Wall Street Journal reported.
"With real sadness, because we all recognize that the mission of helping individual investors be more successful...is so important, the Directors of Investors Education are all resigning," fund Chairman Charles Ellis wrote in a note to two advisory panels. "We sincerely hope that with a new organization structure, a new team working effectively with the SEC can make real progress."
As part of the $1.4 billion April 2003 settlement of charges that 10 of the larger Wall Street firms had tinkered with stock research to boost investment-banking business, the $55 million fund has been hindered by management squabbles since its inception, the Journal reported.
The loss of Ellis, 67, a veteran Wall Street consultant and respected investment authority, is a setback to SEC Chairman William Donaldson, who had championed Ellis for the position.
The Journal reported that an SEC spokesman said the agency is "as unhappy and frustrated as anyone with the management of the investor education foundation, which seems to have delayed [its] progress in getting off the ground." While "disappointed" in the resignations, the SEC said it remains committed to the fund's success.
This latest group of resignations follows the January departure of George Daly, the fund's executive director, who left after a dispute with SEC staffers over office space he had chosen in New York for the fund in the Citigroup Inc.'s Park Avenue headquarters.
The SEC staff had contended that leasing the expensive space would send the wrong message since Citigroup paid twice as much as any other company-$400 million-to settle the research charges. Both Ellis and Daly, a former dean of the New York University business school, say they didn't realize the space was in the Citigroup building, the Journal reported.