U.S. Securities and Exchange Commission Chairman Mary Schapiro may have to revise a proposal for hiring the agency’s next internal watchdog after at least three commissioners demanded greater say in the process, according to two people familiar with the matter.
Commissioners were recently presented the plan in which panels of senior SEC staff would rate, interview and suggest final candidates to succeed H. David Kotz, according to the people, who asked not to be named because the plans weren’t public.
SEC spokesman John Nester said in a statement that it was Schapiro’s idea to direct the staff to work together with other commissioners on an approach to the hiring process. After the staff developed an initial proposal, each commissioner was asked for their thoughts, he said.
“The chairman had not yet embraced any particular approach and looks forward to continuing the collaborative process,” Nester said. “That process is under way.”
Kotz, whose four-year tenure as inspector general ends today, was accused by SEC employees and alumni of pursuing investigations that often lacked evidence of wrongdoing and unfairly damaged some workers’ reputations. Kotz also came under scrutiny for giving a lengthy interview to the host of a paid radio show who posted it on his website and uses it in marketing financial services.
The flap over Kotz’s tenure has made commissioners and staff more sensitive to how the agency oversees the inspector general’s office, the people said. While the watchdog previously reported to the chairman, the 2010 Dodd-Frank Act gave the responsibility to the full five-member commission.
Citing that change, three of the commissioners told Schapiro they should have an equal say over which staff will rate and interview candidates for the job, according to the people. The commissioners have also called for new procedures and policies to clarify who the new watchdog would report to and what kind oversight the commission would have.
Noelle Maloney, who has served as Kotz’s deputy, will be acting inspector general until a replacement is named, the SEC said in a statement today.
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