WASHINGTON – President Bush yesterday named Rep. Christopher Cox to head the Securities and Exchange Commission, replacing William Donaldson, who announced his resignation on Wednesday.

Wall Street should be reassured by Mr. Bush’s choice, but it will rattle trial lawyers, a former SEC chairman said.

Wall Street will welcome the Republican as “a pro-business conservative,” said Arthur Levitt. “The trial lawyers will be very distressed, obviously.”

Mr. Cox, 53, chairs the House Committee on Homeland Security, and served on the Commerce Committee when it was responsible for overseeing securities markets. He was one of the architects of the 1995 Private Securities Litigation Reform Act, designed to limit frivolous private lawsuits, including class-action claims filed by shareholders. Trial lawyers opposed the bill.

Private class-action lawsuits are “how the people whose money has been stolen get it back,” and the House bill championed by Mr. Cox would have set a steep hurdle, requiring proof of intentional fraud by corporate chief executives, said a lawyer for the AFL-CIO, Damon Silvers. If the Senate hadn’t objected, Mr. Silvers said, the House bill would have allowed corporate CEOs “to recklessly defraud investors with impunity.”

“President Bush appears to want to put Social Security at risk in a marketplace where the chief cop thinks that ‘I know nothing’ should be the guide to CEO conduct,” Mr. Silvers complained.

Mr. Levitt said he expects Mr. Cox to be a good SEC chairman. “He has the advantage of knowing Congress and knowing the issues,” he said.

Mr. Cox’s political skills could help heal rifts that split the SEC under Mr. Donaldson’s watch. In the past year, the five-member SEC adopted several controversial rule changes on 3-2 votes, with Mr. Donaldson siding with Democratic commissioners, leaving Republicans in the minority.

Rescinding Mr. Donaldson’s decisions isn’t likely to be in the cards, in Mr. Levitt’s view. Few SEC chairmen “spend much time rolling back their predecessors’ work,” he said.

“I’ve never seen it happen,” said a former acting SEC chairwoman, Laura Unger.

Undoing rules once they are on the books is difficult, but Mr. Cox “will guide the commission in a completely different way,” Ms. Unger predicted.

One area on which Mr. Cox might want to focus is the impact of the Sarbanes-Oxley Act, adopted in the wake of corporate accounting scandals.

The 2002 law tightened rules on corporate internal controls, requiring public companies and their outside auditors to conduct an annual review and notify shareholders and regulators of big weaknesses. Some companies that came under the requirement have complained it is time-consuming and costly.

“The pendulum may be swinging back,” with Mr. Bush’s selection of Mr. Cox, said Ms. Unger.

The SEC’s policies have been at odds with Mr. Cox’s on a controversial issue: stock options expensing.

Mr. Cox is one of several lawmakers to co-sponsor legislation that would block a new stock option expensing standard from taking effect. Computer companies in Cox’s home state of California have opposed deducting the cost of employee stock options because that would diminish the profit they report to investors, although regulators say the cost of options should be disclosed.