The Securities and Exchange Commission voted to appoint Judge William H. Webster, former FBI Director and CIA Director, as the Chairman of the new federal board which is designed to oversee the audits of the financial statements of public companies through rigorous registration, standard setting, inspection and disciplinary programs.

Four additional members of the oversight board were also named including: Willis D. Gradison, Jr., former Senior Public Policy Counselor at Patton Boggs, LLP and former Ohio Republican Representative; Kayla J. Gillan, V.P. Independent Fiduciary Services and former general counsel of the California Public Employees’ Retirement System; Daniel L. Goelzer, Partner of Baker & McKenzie and formerly SEC General Counsel; and Charles D. Neimeier, Chief Accountant in the SEC’s Division of Enforcement and Co-Chairman of the SEC Financial Fraud Task Force.

The SEC commission approved Webster by a 3-2 vote after a long bitter debate. As stated in the Wall Street Journal, Harvey Pitt, SEC chairman, denied that he was under pressure to push William Webster as the new chairman of the oversight board. Mr. Pitt insisted that he was never approached by the White House, Republicans or anyone in the accounting profession. Harvey Pitt said: “The individuals selected to serve on the Board clearly meet and exceed all the requirements in the Act - they are individuals of high integrity and reputation who have demonstrated a commitment to serving the interests of investors, and they understand the financial reporting process. They are each committed to meaningful reform. In addition, they bring to the Board a combination of investor advocacy, regulatory and legal experience.”

The specific activities of the accounting oversight board remain to be determined and is the next step in this process. Additionally, the board must hire staff and register all accountants who audit public companies. This registration must occur within 180 days after the SEC determines that the board is ready to carry out its responsibilities.

According to the law, two of the board members must be from the accounting profession and three from other areas. The board will have the power to discipline accountants and to issue subpoenas. Public traded corporations will primarily fund the operations of the oversight board.