SEC Names Bill Gradison Acting Chairperson; Approves PCAOB Appointment Procedures

FOR IMMEDIATE RELEASE
2005-171

Washington, D.C., Dec. 2, 2005 - The Securities and Exchange Commission today announced it had appointed Bill Gradison acting Chairperson for the Public Company Accounting Oversight Board and adopted procedures for the selection of permanent Chairpersons and Board members.

The PCAOB, which is subject to oversight by the Commission, was created by the Sarbanes-Oxley Act of 2002 and is responsible for supervising accounting firms that audit public companies.

"As a founding member of the PCAOB, Bill Gradison has demonstrated the leadership ability and experience necessary to oversee the continued progress of this important organization," SEC Chairman Christopher Cox said. "During this interim period, I look forward to working with him, his colleagues, and the PCAOB staff for the protection of investors."

"The selection of the next Chairman of the PCAOB will be substantially aided by the Commission's procedural action announced today. These new procedures are intended to make the selection process transparent, to encourage the thorough consideration of all qualified candidates, to ensure a thorough vetting of candidates, and to establish timetables for the expeditious appointment of individuals of the highest caliber for this critical body," Chairman Cox said. "I deeply appreciate the thoughtful contributions that my fellow Commissioners and the professional staff of the SEC have made to this enduring framework that will benefit investors for years to come."

Gradison, a founding member of the board, has served as the Chairman of the Board of Directors of the Federal Home Loan Bank of Cincinnati, an investment broker, and a corporate director. He has a doctorate from Harvard University, an MBA from Harvard Business School, and an undergraduate degree from Yale University. In the 1950s, he was an Assistant to the Secretary of Health, Education and Welfare and an assistant to the Under Secretary of the Treasury. He was a member of the audit committee for Project HOPE. Gradison is the former president of the Health Insurance Association of America and was the Senior Public Policy Counselor at the law firm of Patton Boggs from 1999 until 2002. He was a member of Cincinnati City Council for 13 years, from 1961 to 1974, serving as vice mayor from 1967 to 1971 and mayor in 1971. In Congress, Gradison served as ranking member of the House Budget Committee.

The selection procedures approved today build upon the previous practice of the Commission, and include a timetable for the recommendation of candidates, background checks, Commission interviews, and final selection. The new procedures will apply whenever vacancies occur.

Under the newly adopted procedures, the Chairman will lead a search to identify qualified candidates and will solicit nominations and input from each of the SEC's current Commissioners, who may each submit up to three nominations.

The Chairman will also consult with the Secretary of the Treasury and the Chairman of the Federal Reserve, as required by the Sarbanes-Oxley Act, and solicit recommendations from other executive branch, congressional, investor, academic, and business community sources, and such others as the Chairman deems appropriate.

A list of potential candidates willing to serve will be circulated to all Commissioners, who will have five business days to confidentially notify the Chairman if he or she is unwilling to support one or more persons on the list for appointment to the PCAOB. A candidate shall be eliminated from further consideration if three or more members of the Commission indicate that they would not support the candidate's appointment.

The Chairman will place the remaining names on a list that will be circulated to all Commissioners, who will, within one business day, nominate one of the remaining candidates to be a finalist in the selection process. Each of the finalists shall be asked to complete a background questionnaire and release and shall be asked to participate in a background interview.

Based on evaluation of these contacts and materials, the Chairman shall select no fewer than two and no more than three of the finalists for detailed evaluation in the selection process and select a contractor to perform background checks on the remaining finalists.

Within 30 calendar days, the contractor retained by the Commission shall complete background checks on the remaining finalists. In the case of an individual who is either an incumbent member of the PCAOB or a presidential appointee, the Commissioners may by unanimous agreement waive this requirement.

No later than 10 calendar days after completion of the preceding step, an additional vetting process will be completed by the Commission under the direction of the Chairman, drawing upon the resources of the Office of the General Counsel and the staff of relevant Divisions and Offices of the Commission, as needed. This detailed evaluation will include an examination by the Office of the General Counsel of relevant public and Commission databases concerning each of the remaining finalists.

Upon completion of the preceding step, all documentation from the Commission's contractor regarding its background checks, and all relevant documentation otherwise created or assembled for the Commission by the finalist or the Commission's staff, will be made available to all Commissioners.

At the completion of the interview and evaluation process, the Chairman will, as promptly as practicable, consult finally with the Secretary of the Treasury and the Chairman of the Federal Reserve, and upon completion of the consultative process, the Chairman shall, after a reasonable opportunity for consideration, seek a vote of the Commission to approve appointment of a candidate.

http://www.sec.gov/news/press/2005-171.htm