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Tell SEC Chair Mary Jo White: Recuse yourself from picking auditor watchdog chief.

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Petition to Securities and Exchange Commission Chair Mary Jo White:

"Immediately recuse yourself from deliberations to choose the next head of the auditor watchdog, the Public Company Accounting Oversight Board (PCAOB). You have an unacceptable conflict of interest due to your husband’s role with the PCAOB’s advisory group which his law firm has outrageously and actively marketed to attract Wall Street clients."

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    Tell SEC Chair Mary Jo White: Recuse yourself from picking auditor watchdog chief.

    Another day, another even more outrageous conflict of interest for Securities and Exchange Commission (SEC) Chair Mary Jo White.

    In her role as SEC chair, White is about to pick the next head of the Public Company Accounting Oversight Board (PCAOB), a key regulator created after the Enron scandal to make sure audit companies don’t help Wall Street firms lie about their books.1 But not only does her husband sit on the board’s advisory group, his law firm bragged on its website about John White’s access and influence before deleting the reference when reporters started asking questions.2

    Despite the blatant conflict of interest, Mary Jo White, a Democratic appointee, is still considering replacing the current chair with a Republican Senate aide.3 Our friends at the Center for Effective Government are calling for Mary Jo White to instead recuse herself from choosing the next chair of the auditor watchdog, and we need to echo their demands and make it clear that her blatant conflict of interest is unacceptable.4

    Tell SEC Chair Mary Jo White: Recuse yourself from picking auditor watchdog chief.

    Mary Jo White’s husband, John White, sits on the auditor watchdog’s advisory group. His law firm, Cravath, Swaine & Moore, regularly defends Wall Street clients from charges by regulators and “often plays up John White’s role with PCAOB,” highlighting it in marketing materials.5 But last week, after Bloomberg News published a story about the Center for Effective Government’s call for recusal, the firm hastily deleted any references from its website.6

    An SEC spokesperson claims the commission’s internal ethics review approved Chair White picking the next head of the auditor watchdog.7 But the agency refuses to make the findings public – and if there were nothing at all unseemly going on, John White’s law firm wouldn’t be in such a rush to downplay the connection.

    Mary Jo White sparked the attention on this latest conflict of interest by publicly declaring that she is looking at outside candidates to replace the head of the auditor watchdog, even though the current chair, James Doty, is supported by the two Democratic SEC commissioners and a host of others, including former Fed Chairman Paul Volcker and a former head of the auditor watchdog.8,9 White’s shortlist reportedly even includes the top Republican staff member of the Senate Banking Committee.10

    At best, Mary Jo White is siding with big business against reformers. At worst, she is trying to force out a regulator who has raised the ire of her husband’s Wall Street clients. If White wants to restore trust in the SEC, she needs to recuse herself immediately.

    Tell SEC Chair Mary Jo White: Recuse yourself from picking auditor watchdog chief.

    James Doty, the current chair of the PCAOB, has ruffled some feathers by sticking up for investors. He’s pushed for audits to be signed by individuals, not just the name of the firm, to increase accountability. And he tried to force firms to adopt new auditors every few years – a practice that has since become law in Europe – before being shut down by Wall Street and Congress.11 His advocacy has even resulted in clashes with the head of the SEC Accounting Division, a former Deloitte executive who, observers say, focuses on protecting the audit industry.12

    In just the past year, Walmart admitted to financial irregularities on its books, and Toshiba said it had overstated profits by nearly $2 billion. Observers say audit firms’ cozy, lucrative, decades-long partnerships with big companies like these encourage them to look the other way – which is why, after the Enron and WorldCom scandals, Congress created the auditor watchdog in the first place.13

    Tough oversight of auditors gives investors confidence that companies aren’t lying and prevents economy-wrecking scandals. We can’t afford to let Mary Jo White weaken the auditor watchdog – we need to demand she recuse herself immediately.

    Tell SEC Chair Mary Jo White: Recuse yourself from picking auditor watchdog chief.

    Thank you for speaking out,

    1. David Michaels, “The Jockeying Has Begun to Fill a High-Paid Job in Washington,” Bloomberg News, September 9, 2015.
    2. Francine McKenna, “Law firm removes references to SEC chief’s husband’s ties to audit regulator,” Market Watch, September 18, 2015.
    3. Michaels, “The Jockeying Has Begun to Fill a High-Paid Job in Washington.”
    4. Robert Schmidt and David Michaels, “SEC Chair Faces New Conflict Claims Over Husband’s Legal Work,” Bloomberg News, September 16, 2015.
    5. Ibid.
    6. Mark Mellin, “Mary Jo White In Yet Another Conflict Of Interest Issue,” ValueWalk, September 18, 2015.
    7. Schmidt and Michaels, “SEC Chair Faces New Conflict Claims Over Husband’s Legal Work.”
    8. Dena Aubin and Sarah N. Lynch, “After backlash, U.S. auditor watchdog head faces uncertain future,” Reuters, September 22, 2015.
    9. Eleanor Bloxin, “Walmart, Toshiba, and the audit firms: Wake up SEC!,” Fortune.com, September 16, 2015.
    10. Michaels, “The Jockeying Has Begun to Fill a High-Paid Job in Washington.”
    11. Michael Rapaport and Andrew Ackerman, “SEC Looking at Outside Candidates to Lead Audit Regulator PCAOB,” The Wall Street Journal, September 9, 2015.
    12. McKenna, “Law firm removes references to SEC chief’s husband’s ties to audit regulator.”
    13. Bloxin, “Walmart, Toshiba, and the audit firms: Wake up SEC!.”