SEC to investigate appointment
Chairman faces allegations involving selection of accounting oversight board leader
Washington ? Securities and Exchange Commission Chairman Harvey Pitt asked Thursday for an investigation of William Webster’s selection to head an accounting oversight board after the disclosure that Pitt concealed information about Webster from SEC commissioners.
Commission spokeswoman Christi Harlan said the agency’s inspector general, Walter Stachnik, would conduct the internal investigation, calling it “the normal route” for such inquiries. “This is simply a look at the process and it is not a review of Judge Webster,” she said.
The White House firmly backed Pitt, even as spokesman Scott McClellan acknowledged, “We don’t know the facts.” He said the administration did not learn that Pitt had allegedly withheld information until it received a phone call from a reporter.
Top Democrats renewed calls for Pitt’s resignation.
Harlan confirmed the request for the IG investigation in the wake of a revelation that Pitt had failed to tell other commission members in advance of last Friday’s SEC vote that Webster had headed an auditing committee of a company facing fraud charges.
A sharply divided SEC approved Webster’s appointment that day. The two Democrats on the commission supported another candidate whom they believed would advocate tough regulation of the accounting industry.
In an interview with The New York Times, Webster said he told Pitt and Robert K. Herdman, the SEC’s chief accountant, before the vote that he had headed the auditing committee for U.S. Technologies, a company facing lawsuits alleging fraud.
“I told them that people are making accusations,” Webster told the newspaper. “I said if this is a problem, then maybe we shouldn’t go forward.”
He said he was assured by Pitt that SEC staff had looked into the issue and that it would not pose a problem.
U.S. Technologies’ former accounting firm, other members of the auditing committee, company executives and investors told the Times they were never contacted by anyone at the commission about the appointment.
Webster said he called Pitt again on Monday, three days after he was appointed, saying he had heard over the weekend that a government probe had been opened to investigate possible fraud by the chief executive of U.S. Technologies, C. Gregory Earls. Pitt did not tell the other commissioners about the Monday conversation.