SEC's beleaguered accounting chief quits
By Marcy Gordon
Associated Press
WASHINGTON — The chief accountant of the Securities and Exchange Commission resigned yesterday amid investigations into his role in the selection of former CIA and FBI chief William Webster to head a new accounting oversight board.
The move by Robert Herdman came just three days after SEC chairman Harvey Pitt, a Bush appointee who pushed Webster's appointment, resigned under pressure.
In a letter to Pitt, Herdman said he was resigning "in light of recent events" and because the SEC's "objectivity" in making important decisions in coming weeks could be compromised if he stayed.
Pitt, in a speech to a securities industry group, acknowledged that "turmoil surrounding my chairmanship makes it very difficult for the commissioners and staff to perform critical assignments."
"I hope my successor isn't greeted with the same climate of attack and partisanship," said Pitt, who is remaining as chairman for a transition period. President Bush must name a successor to be confirmed by the Senate.
Pitt, Herdman and an SEC commissioner initially approached Webster about taking the oversight job, mandated by Congress last summer in response to the wave of accounting scandals. After Webster told Pitt that he had headed the audit committee at a company now facing fraud accusations, Herdman's office told Pitt that did not create a problem for Webster's selection.
Pitt did not tell his fellow SEC commissioners about Webster's watchdog role at U.S. Technologies before they voted to approve Webster in the new job two weeks ago. Neither did Pitt inform anyone at the White House, where Bush's chief of staff had endorsed Webster's selection.
Webster fired U.S. Technologies' outside auditors last year when he headed the board of directors' auditing committee.
The SEC inspector general and Congress' investigation arm, the General Accounting Office, are investigating the events surrounding Webster's appointment. The Senate Banking Committee also plans hearings.
Pitt's naming of Herdman to the post about a year ago generated some controversy. Herdman was an executive of Ernst & Young, one of the Big Five accounting firms.
The SEC has brought two auditor independence actions in recent years against Ernst & Young. In May, the agency said that Ernst & Young violated the rules designed to keep accountants independent from the companies they audit by engaging in business with a software company client. The accounting firm disputed the SEC's allegations.
