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SEC© Chair Faces New Conflict Claims Over Husband’s Legal Work

Publisher: Bloomberg
Authors: Robert Schmidt and David Michaels

U.S. Securities and Exchange Commission Chair Mary Jo White is facing pressure to recuse herself from picking the next head of the regulator that polices accountants because of a potential conflict with her husband’s legal work.

White is in the midst of weighing candidates to head the Public Company Accounting Oversight Board, a little-known watchdog whose chairman makes more than $670,000 a year and has great sway over the industry.

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.”

Hauser said he is concerned that White will help pick the chairman of the board who is then ultimately responsible for John White’s job on the advisory panel. There is at least the appearance of a conflict of interest, Hauser said.

John White declined to comment through a firm spokeswoman. Mary Jo White also declined to comment through an SEC© spokeswoman, who added that agency ethics lawyers approved White’s participation in selecting a PCAOB chairman after determining it didn’t pose a conflict.

The PCAOB’s Standing Advisory Group includes auditors, investors and company executives. Its mission is to help the regulator set auditing standards that accounting firms must follow.

Sitting on the advisory group provides frequent interactions with the five PCAOB board members and the regulator’s top staff, including phone calls and an open door for meetings in Washington.

The issue of potential conflicts between SEC© Chair White and her husband’s law practice isn’t new. When Mary Jo White became head of the agency in 2013, John White stepped down as an equity partner at Cravath in an effort to minimize potential problems.

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