Say it ain't so Mary Jo

SEC’s Mary Jo White Plots to Oust Effective Accounting Regulator, in Face of Escalating Criticism Over Conflicts
Posted on September 21, 2015 by Yves Smith


The evidence that SEC Chairman Mary Jo White needs to go becomes more overwhelming with every passing day.

One brewing scandal which has not gotten the attention it warrants is over the selection of the next chairman of the Public Company Accounting Oversight Board, which oversees auditors. Enron and Lehman’s Repo 105 accounting dodge are proof in and of themselves of the importance of having tough accounting standards.

The current chairman of the PCAOB, John Doty, is widely seen as doing a good job despite the anti-regulatory bent of the times, and would like to stay in his post when his term ends this October. I heard that Mary Jo White had the knives out for him when I was in DC in early May, but wasn’t sure what I could say about it (“Mary Jo White Plans to do Something Bad” is almost a dog-bites-man story).

But as Francine McKeenna describes in a MarketWatch story, Mary Jo White’s conflicts, as well as her corporate cronyistic reasons for seeking to replace Doty have turned the pending appointment of the PCAOB chairman into an ugly fight, with no less that Columbia law professor John Coffee, the dean of the securities law bar, calling out Mary Jo White’s conduct in unusually blunt terms.

The reason the PBAOC matters is that it was created as part of Sarbanes Oxley, meaning in the wake of Enron and other accounting scandals in the early 2000s. Sarbanes Oxley stipulated that all firms that audited public companies had to register with the PBAOC and be subject to its supervision, which includes not just rules combatting fraud but also professional standards. As Coffee stressed, the ability to set professional standards gives the PBAOC further reach than the SEC. But the PBAOC in turn is subject to SEC oversight. And Mary Jo White put Doty’s reappointment in doubt by telling an industry group on September 9 that the SEC was looking at outside candidates to head the regulator. ...................(more)

http://www.nakedcapitalism.com/2015/09/secs-mary-jo-white-plots-to-oust-effective-accounting-regulator-in-face-of-escalating-criticism-over-conflicts.html