The chief accountant of the Securities and Exchange Commission said yesterday he will step down after two years of service that included cracking down on financial manipulation and fielding business complaints about costly new regulations.

Donald T. Nicolaisen, 61, came to national prominence last year after he ordered Fannie Mae to revamp its accounting practices -- a strong rebuke that caused the District-based mortgage finance company to announce it would restate previously reported earnings by $10.8 billion.

At the same time he was pushing for more accurate accounting, Nicolaisen heeded vocal protests from the business community over the difficulty of complying with the new Sarbanes-Oxley corporate accountability law, extending deadlines for companies to follow stringent new internal control rules. He also prodded businesses to improve disclosures to investors and labored to boost public confidence in the accounting industry after failures at Enron Corp. and WorldCom Inc.

"I am very proud of what we have accomplished and the steps we have taken to protect investors and to provide stability for our markets," Nicolaisen said.

The Wisconsin-born accountant, who said he would return to private practice, spent nearly four decades at PricewaterhouseCoopers LLP, handling audits for such clients as J.P. Morgan Chase & Co. and Prudential Financial Inc. He joined the agency in August 2003, at the request of then-Chairman William H. Donaldson.

New SEC Chairman Christopher Cox said Nicolaisen "served with distinction during challenging times, and has met every challenge -- most notably by establishing landmark new protections for investors" under the 2002 Sarbanes-Oxley Act.

Nicolaisen's departure gives Cox yet another opportunity to put his stamp on the agency. Cox, who took office days after being confirmed by the Senate on July 30, said he is searching for a replacement.

Separately, the new chairman is considering candidates to lead the SEC's market regulation unit, which oversees the New York Stock Exchange and the Nasdaq Stock Market, and the investment management unit, which regulates the $8.1 trillion mutual fund sector.

Donald T. Nicolaisen told Fannie Mae to change its accounting.