Securities and Exchange Commission chair Mary Jo White has been asked by progressive public interest groups to recuse herself from an accounting industry watchdog staffing appointment process.
The fourteen non-profits told White in a letter sent Thursday that she should give up her say on who the next chair of the Public Company Accounting Oversight Board (PCAOB) will be because of her spouse’s alleged stake in the matter.
John White–a non-equity partner with financial services law firm Cravath, Swaine & Moore, LLP–is on a PCAOB advisory committee. Cravath advertised this until last month, after the marketing ploy was publicly highlighted by the Center for Effective Government—a signatory to the Oct. 8 letter.
“John White’s appointment to the [Standard Advisory Committee] may have been approved by SEC Ethics officials, the groups wrote, “but even if not in direct violation of ethics laws, the arrangement is at least evocative of the sort of activity that runs contrary to the anti-nepotism statute.”
Prominent organizations including Public Citizen, the Communications Workers of America, and MoveOn.org signed the letter.
Currently vying for the PCAOB’s chair, according to Bloomberg, are its incumbent James Doty, a board member named Louis Ferguson, and William Duhnke, the highest ranking Republican staffer on the Senate Banking Committee.
Doty, the news service noted, has often run up against “some of the big accounting firms.” Since his tenure started in 2011, it also remarked, “the board has struggled to enact regulations in the face of industry lobbying.”
One rule the PCAOB proposed last year but failed to implement: a requirement that companies switch auditors every ten years to prevent in-house conflicts of interest arising from friendships and close relationships.
“Accounting firms have also fought Doty’s effort to require that auditor names be published in financial statements, a move that would reveal to investors who actually reviewed a company’s books,” Bloomberg additionally noted. “Audit reports have long carried only the firm’s identity.”
The PCAOB is a non-profit that was established by Congress in 2002 after the Enron accounting scandal.
While the SAG has not been bestowed with decision-making abilities, its opinions, in the words of the Oct. 8 letter, can give a legal springboard to those seeking to challenge PCAOB rules.
“[T[he Administrative Procedures Act provides a basis for plaintiffs to block rules that fail to address advisory committee input,” the letter’s signatories said. “Whatever the limits of his statutory powers may be at the PCAOB, it cannot go unnoticed by any PCAOB board member with whom Mr. White interacts that he will return at the end of the day to a home that he shares with the SEC Chair.”
John White has been a member of the SAG for half a decade. His current term is set to expire in 2017.
For another Sentinel story about Mary Jo White’s alleged conflicts of interest, click here.
