Ex-chief accountant takes rap for SEC scandal
The former chief accountant of the Securities & Exchange Commission is expected to shoulder most of the blame for the disastrous appointment of William Webster to head the new accountancy watchdog.
Link: Donaldson: A cool head to lead the SEC
Former SEC chief Harvey Pitt, who quit after the botched appointment, will escape blame for the debacle as the Congressional report into the affair shifts most of the blame to Robert Herdman.
The report is due out next week.
According to the Financial Times, a draft of the report by the investigative arm of Congress, the General Accounting Office, said Herdman did not pass on vital information about William Webster to Pitt before the SEC voted to appoint him chairman of the public oversight board.
The report says that Herdman told Pitt that Webster had been the head of the audit committee of US Technologies, a company whose financial dealings were under federal investigation.
Herdman also knew about the controversial firing of the company’s auditors BDO Siedman, the report alleged, but despite this information, he told Pitt the problems should not affect Webster’s nomination.
The report says Herdman also failed to pass on a later discovery that BDO Seidman had raised problems with US Technologies’ internal financial controls and the auditor had been fired soon after.
It was this information, revealed after Webster’s nomination, that was widely seen as proof that neither the watchdog’s former chairman nor Pitt were suitable for their jobs.
On Monday, US president Bush nominated William Donaldson to replace Pitt as chairman of the SEC.