The Insider’s Guide to the Future of Financial Reporting

Clubby as it seems, the SEC's new reform committee might find itself roiled by conflicts between transparency zealots and accounting diehards.

Call them the ruling elite of financial reporting. Or dub them Christopher Cox’s private reform club. But when Robert Pozen snaps down his gavel at the first meeting of the Securities and Exchange Commission’s Advisory Committee on Improvements to Financial Reporting at 10 AM on Thursday, he’ll preside over a fairly chummy group.

Take Peter J. Wallison, a member of the 17-member committee that’s seeking to wring unneeded complexity out of current corporate accounting standards. Wallison, a senior fellow of the American Enterprise Institute and co-director of the conservative think tank’s program on financial market deregulation, has known SEC Chairman Cox for a long, long time.

Wallison, in fact, used to supervise Cox and helped launch his career in government. The two met in the eighties when Wallison, then counsel to President Ronald Reagan’s Administration, hired Cox, a partner at Latham & Watkins, as an associate counsel to Reagan during his second term, according to press accounts.

For his part, Pozen sits at the nexus of at least two connections to other members of the group. Named by Cox to chair the committee, he’s also a member of the Committee on Capital Markets Regulation, an ostensibly independent group that has been advocating for regulatory relief and is accused by critics of being too closely tied to members of the Bush Administration, notably Treasury Secretary Hank Paulson, who publicly backed the group’s efforts. Joining Pozen will be another member of the CCMR, Scott C. Evans, an executive vice president for asset management for TIAA-CREF in New York City. Students of Cox’s repertoire of politically fine-tuned actions will be curious about what such appointments say about Cox’s sympathies with Paulson’s regulatory reform agenda.

Besides his membership in the CCMR, Pozen, now the chairman of MFS Investment Management, once served as associate general counsel for the SEC. In that respect, he joins two other commission alums who are committee members: Stanford law professor Joseph Grundfest served for more than four years as an SEC Commissioner, and Linda Griggs, now a partner at the Morgan Lewis law firm in Washington, was once chief counsel to the chief accountant of the SEC.

To be sure, G. Edward McClammy, one of four current or former CFOs named to the SEC’s advisory committee, seems not to have done time at the commission. But McClammy, the CFO and treasurer of Varian, Inc., still has a solid link to the SEC. A year ago, before Conrad Hewitt became the SEC’s chief accountant, Hewitt was chairman of Varian’s audit committee.

That’s not to say that the committee doesn’t have its share of potentially contrarian voices as it goes about its business of proposing actions aimed at making financials clearer. For instance, there’s a hefty contingent with ties to the Financial Accounting Standards Board, which has had its struggles with the SEC this year.


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