SEC’s Schapiro Said to Face Pushback Over Choosing Next Watchdog
February 06, 2012, 3:48 PM ESTBy Joshua Gallu
Jan. 27 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Mary Schapiro may have to revise her plan for hiring the agency’s next internal watchdog after at least three commissioners demanded greater say in the process, according to two people familiar with the matter.
Schapiro recently told commissioners that she had selected panels of senior SEC staff to rate, interview and suggest final candidates to succeed H. David Kotz, according to the people, who asked not to be named because the plans weren’t public.
Kotz, whose four-year tenure as inspector general ends today, was accused by SEC employees and alumni of pursuing investigations that often lacked evidence of wrongdoing and unfairly damaged some workers’ reputations. Kotz also came under scrutiny for giving a lengthy interview to the host of a paid radio show who posted it on his website and uses it in marketing financial services.
The flap over Kotz’s tenure has made commissioners and staff more sensitive to how the agency oversees the inspector general’s office, the people said. While the watchdog previously reported to the chairman, the 2010 Dodd-Frank Act gave the responsibility to the full five-member commission.
Citing that change, three of the commissioners told Schapiro they should have an equal say over which staff will rate and interview candidates for the job, according to the people. The commissioners have also called for new procedures and policies to clarify who the new watchdog would report to and what kind oversight the commission would have.
Noelle Maloney, who has served under Kotz as his deputy, will be acting inspector general until a replacement is named, said SEC spokesman John Nester, who declined immediate comment on the hiring process.
--With assistance from Robert Schmidt and Jesse Hamilton in Washington. Editors: Maura Reynolds, Gregory Mott
To contact the reporter on this story: Joshua Gallu in Washington at jgallu@bloomberg.net
To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net
