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January 31, 2023

More Twists in the Race to Be The Next PCAOB Chairman

John White, a prominent lawyer with Cravath, Swaine & Moore, sits on the PCAOB's Standing Advisory Group. His wife, Mary Jo, chairs the SEC. She, along with the other commissioners, will choose the next PCAOB chair. Some people don't like how that looks:

The Center for Effective Government, an advocacy group, said White should step aside because her husband, John White, sits on an official advisory group to the audit board. While the position is unpaid, it gives John White regular access to top PCAOB officials. His law firm, Cravath, Swaine & Moore, highlights the role in marketing materials.

“The White family has to deal with this conflict,” said Jeff Hauser, who runs the Revolving Door Project at the Washington-based center that promotes government transparency and accountability. “It makes Mary Jo White’s role choosing PCAOB officials problematic.”

Fun facts about John White: He graduated from UVA with honors in accounting and he's an Elijah Watts Sells winner. He also spent some time serving on the Financial Accounting Standards Advisory Council (FASAC). I don't think anyone would make bones about his qualifications to be on the SAG.

However! The Whites have been criticized a lot for the conflicts between them. MJW has recused herself from a lot of SEC enforcement investigations due to her husband's work at Cravath. Back in February, The New York Times counted four dozen cases since she became chair.

And now we have this PCAOB chair appointment. Current chair Jim Doty wants another term and has a slew of people pulling for him. It wouldn't be a stretch to say that the U.S. Chamber of Commerce would prefer someone else like, say, the top Republican Staff Member on the Senate Banking Committee who, by the way, has already been recommended by his boss, Banking Committee Chairman Senator Richard Shelby. Who knows! Maybe they (and the audit firms) prefer anyone other than Doty, including Lewis Ferguson, a current board member who's also been whispered as a candidate.

If MJW has already made up her mind to re-appoint Doty then that would make this whole identifying "interested and qualified candidates" a ruse and kinda fun, especially because it would irk the Chamber even more. If a new chair ascends and he is more sympathetic to the whims of banks and audit firms, well, that might be fun, too. But probably not for the Whites.

SEC Chair Faces New Conflict Claims Over Husband’s Legal Work [Bloomberg]

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