SEC Picks Former General Counsel Doty to Lead Auditors' Oversight Board
James R. Doty, who served as general counsel of the U.S. Securities and Exchange Commission in the 1990s, will lead the Washington-based panel that oversees auditors of company financial statements.
The SEC commissioners, who oversee the five-member Public Company Accounting Oversight Board created under the Sarbanes- Oxley Act, approved Doty as one of three appointees to the board, the SEC said in a statement today.
Doty, 70, has represented clients on SEC matters and counsels company directors on Sarbanes-Oxley accounting rules as a partner at Baker Botts LLC. He’ll be joined by other new members Lewis H. Ferguson, a partner at Gibson, Dunn & Crutcher LLP in Washington, and Jay D. Hanson, an accounting partner at McGladrey & Pullen LLP in Bloomington, Minnesota.
“I look forward to getting engaged with the board and its activities as quickly as possible,” Doty said in an interview, adding that he expects to start work full-time by the end of the month. “It’s an exciting time and an exciting prospect. I want to get on with it.”
“These prominent individuals have in-depth knowledge of the financial reporting system and auditing framework, which will serve the PCAOB well as it executes its rigorous agenda,” said SEC Chairman Mary Schapiro, in a statement.
Earlier Nominee
John J. Huber, who headed the SEC’s corporation finance division in the 1980s, had been presented to the commissioners as a chairman nominee, according to four people with knowledge of that decision. The SEC changed course this week during the initial internal vote.
It’s unclear why Huber, 62, a law partner at Latham & Watkins LLP in Washington, was withdrawn.
"I want to add my congratulations to Jim Doty for this selection as chairman," Huber said in a statement. "We will be well-served by his selection."
The PCAOB, which is funded by fees on public companies, has operated without a full board since Mark W. Olson left the chairmanship in 2009. Board member Daniel L. Goelzer has served as interim chairman, and two board members have served past the end of their terms.
The PCAOB sets auditing standards for firms that certify the books of companies with U.S.-registered securities and is responsible for ensuring auditors comply with its rules. The board also has an enforcement division that can issue subpoenas and bring disciplinary actions against auditors.
Legal Challenge
The SEC held off filling vacancies pending resolution of a legal challenge of the panel’s right to exist. That right was reinforced in June, when the U.S. Supreme Court upheld the PCAOB’s constitutionality in a 5-4 decision that expanded the SEC’s authority to hire and fire the board’s members.
Board members Charles D. Niemeier, whose term expired more than two years ago, and Bill Gradison, whose appointment ended in October, were permitted to stay until replaced.
Goelzer, whose term expires in October, thanked the departing members in a statement today and called the new picks “three outstanding individuals.”
Because Congress stipulated in creating the PCAOB that commissioners’ salaries must be competitive with the private sector, pay for the panel’s five members far exceeds the norm for government service in Washington. The chairman earns $672,676, more than four times what Schapiro gets as SEC chairman. Board members get $546,891, exceeding President Barack Obama’s $400,000 salary.
The board counts almost 2,500 public accounting firms under its registration and has planned for a staff of 717 by the end of 2011. Its budget for that fiscal year, passed by the board on Nov. 23, will be $204.4 million if approved by the SEC.
To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net.
To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.
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