The Securities and Exchange Commission's bungled execution regarding the appointments to the inaugural Public Company Accounting Oversight Board reminds me of an equally disastrous example of play-calling which on Nov. 19, will celebrate its 24th anniversary.
On that blustery fall afternoon nearly a quarter-century ago, the New York Giants, clinging to a slim 17-12 lead, were running out the clock on their rivals from down the Jersey Turnpike, the Philadelphia Eagles. With 30 seconds remaining, all the Giants’ quarterback had to do was fall on the ball, and the game was over. Instead, some coaching genius called for a handoff, which was promptly fumbled and run back for a touchdown by an Eagle defensive back named Herman Edwards, who ironically, now coaches the New York Jets. The stunned Giants found themselves on the wrong end of a 19-17 score.
The play became known as "Miracle at the Meadowlands" and has become ensconced in pro football immortality.
Fast forward to 2002 and our nation’s capital. Instead of Joe Pisarcik, the Giants’ much maligned quarterback in that infamous game, we have SEC chairman Harvey Pitt as signal-caller.
All he had to do literally was run out the clock by appointing TIAA-CREF chief John Biggs as chair of the new PCAOB. Biggs, a strong reformer would have most certainly taken recalcitrant accounting firms and companies out to the woodshed, if necessary, in an effort to clean up the current spate of fraud and accounting scandals. Instead, Pitt handed off to William Webster, the former FBI and CIA chief with far less of an accounting background than even I have, to usher in a new era of regulation.
But wait, there’s more!
Last week the regulator said it would conduct an internal review of Webster’s appointment, after a report came out that Webster headed a three-person audit committee of a small technologies company that was under investigation for fraud. Seems Mr. Webster informed both Pitt and SEC chief accountant about the probe, but was told "not to worry."
Much like the dispirited Giants who went on to lose four of their remaining five games, and eventually fired their head coach and the general manager, the SEC is now an agency in flux, bitterly divided along partisan lines and is quickly becoming to serious accounting reform what the Harlem Globetrotters are to serious basketball. Democratic commissioners Harvey Goldschmid and Roel Campos have publicly denounced the appointment of Webster and declared that their boss caved into pressures exerted by his former clients in the accounting profession to back away from Biggs.
I’d love to be a fly on the wall these days in the SEC lunchroom.
Predictably, Pitt’s detractors (read: Democratic lawmakers) have again called for him to step down and Pitt once more denies he remains beholden to anyone.
To the SEC’s credit, the remaining members of the board — Kayla Gillan, Charles Niemeier, Daniel Goelzer and Willis Gradison carry with them fairly powerful credentials.
But as sports history has shown, if the head coach isn’t up to snuff, then all the quality players in the world won’t bring you a championship ring.
The SEC chairman clearly fumbled away a "gimmee" chance to quiet his critics and show them he is serious about corporate reform. Sometimes, that’s all the opportunity you get.
Just ask Joe Pisarcik.
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