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The SEC Selects Webster to Head New Accounting Oversight Board

In Friday’s open meeting, the three Republicans of the five-member SEC commission — including SEC Chairman Harvey L. Pitt — voted in favor of Webster, citing his long record of government service and career as a law enforcement professional who would crack down on malfeasant audit firms.

The two Democrat commissioners, Harvey J. Goldschmid and Roel C. Campos, opposed Webster’s nomination in today’s open vote, stating their preference for John H. Biggs, the chairman of the TIAA-CREF, one of the nation’s largest pension funds.

Webster, 78, is best known for his long career of government service and law enforcement. In 1978, Former President Jimmy Carter appointed him head of the FBI, and President Ronald Reagan selected him to direct the CIA in 1987. Most recently, he served as a partner at the law firm, Milbank, Tweed, Hadley & McCloy, LLP.

The commission also selected a slate of four other candidates to serve on the oversight panel.

Pitt nominated Webster earlier this week, despite strong opposition from many Democrats and industry professionals, who remarked that the former CIA and FBI director possessed little experience in accounting and market regulations.

Several Democrats accused Pitt, who worked as a corporate lawyer representing a range of clients like the American Institute of Certified Public Accountants and the Big Five accounting firms in the 1990s, of trying to block Biggs, a strong advocate of tougher accounting industry regulations.

Shortly after the commission’s vote, Sen. Paul Sarbanes (D-Mary.), co-author of the massive corporate reform act, called for Pitt’s resignation, criticizing his selection for the new accounting board.

“[Pitt was] appearing to bow to political and industry pressures” by not selecting Biggs, Sarbanes said at a press conference today.

“I have reached the conclusion that the country would be best served if Pitt would step down as chairman of the SEC,” Sarbanes said

The new Public Company Accounting Oversight Board — established by the Sarbanes-Oxley Act in 2002 shortly after the Enron and Arthur Andersen scandals — has the authority to create the professional ethics and industry standards for public audit firms, discipline errant accountants, and administer annual reviews of the country’s largest accounting firms.

Federal Reserve Chairman Alan Greenspan and Treasury Secretary Paul O’Neill, who were required by law to consult with the SEC in the choice of board members, praised Webster’s selection in a joint statement, calling him “an admirable choice for chairman because of his integrity, judgment and experience.”

Webster’s term will expire in 2007.

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