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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: StockDung who wrote (10851)	12/19/2002 7:05:55 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 19428

Accounting Board Probe Finds Broad SEC Failures Thursday December 19, 3:22 pm ET By Kevin Drawbaugh WASHINGTON (Reuters) - The bungled naming of a national accounting oversight board, which cost U.S. Securities and Exchange Commission Chairman Harvey Pitt his job, involved missteps by the chairman, SEC staff and commissioners, according to a congressional report released on Thursday. As one lawmaker likened the commission's handling of the matter to silent film's bumbling "Keystone Kops," the report said the process for choosing the board members "was neither consistent nor effective and changed and evolved over time." In long-awaited findings, the General Accounting Office, Congress' investigative arm, spread blame widely for the debacle that led to three resignations last month, gutting the federal government's market-regulation leadership. Pitt, former SEC Chief Accountant Robert Herdman and William Webster -- first chairman of the new accounting board -- all quit from Nov. 5 to Nov. 12. President Bush has nominated former New York Stock Exchange Chairman William Donaldson to replace Pitt. But successors to Herdman and Webster have yet to be found, even as a stubborn crisis in confidence weighs on U.S. stock markets after a wave of high-profile corporate scandals. Separately, C. Gregory Earls, chief executive of a small, Washington-based investment company whose troubles were central to the accounting board flap, was charged with fraud on Thursday in a Manhattan federal court. Federal prosecutors said Earls, chief executive of U.S. Technologies Inc., was charged with one count of securities fraud, one count of mail fraud and eight wire fraud counts. The company has been sued by investors alleging fraud. On Capitol Hill, Democrats pounced on the GAO report as a chance to criticize Pitt, who became a favorite political punching bag over his rocky, 15-month tenure as SEC chairman. "The Keystone Kops couldn't have done a better job of undermining the formation of the accounting board than the SEC has done. While there is plenty of blame to go around, the buck has to stop at Chairman Pitt's desk," said Michigan Rep. John Dingell, in a statement. SARBANES HITS SEC LEADERSHIP Maryland Sen. Paul Sarbanes, who co-wrote the bill ordering the accounting board's creation, said, "SEC leadership failed in its first and most critical task in implementing the accounting reform and investor protection legislation ... The SEC now needs to move beyond this incident." The GAO report found that Pitt, who had overall responsibility for the process, asked Herdman to guide the selection of the accounting board's five members. Pitt also asked SEC General Counsel Giovanni Prezioso to lead the vetting of potential board members' personal backgrounds, it said. "However, this approach was not fully understood or endorsed by the other commissioners," the report said. The report further pointed the finger at an "inability of the commissioners to reach agreement on a formalized process that defined the roles to be played by the commissioners and staff" and at "insufficient communication." It called on the SEC to agree on a clearer process for appointing members to the accounting board, to set criteria for choosing members and to complete background checks earlier. In a statement, Pitt said, "The GAO has provided a series of useful recommendations that will help to guide this commission as it continues to fulfill its obligations under the Sarbanes-Oxley Act to appoint members to the PCAOB." Last fall, accounting reform advocates and Democrats in Congress fought to get pension fund chief John Biggs named chairman of the accounting board. But Webster, former director of the CIA, won the top spot with the backing of Pitt in a divisive 3-2 vote on Oct. 25 by the commissioners of the SEC. After the vote it emerged that SEC commissioners were not told of information related to Webster's role as chairman of the audit committee of the board of U.S. Technologies. The GAO report said Herdman "decided not to share the information concerning Judge Webster's role ... with the SEC chairman, the other commissioners or the general counsel." It said an "inability to choose a final slate of candidates until the eve of the commission's vote resulted in the appointment of PCAOB members who had not been fully vetted."