Corporate Governance

The SEC, Congress, and the Harm of a Rogue Inspector General (Part 5)

By J Robert Brown Jr.

So where does this leave David Kotz? 

Reports quote him as opposing presidential appointment.   In a statement issued by the Center for Public Integrity, he provided his reasons:     

• 'If I were to be an inspector general that was appointed by the president and cleared by the White House, it might be difficult to convince the public that I could conduct an independent or credible investigation into alleged improper connections between outside forces, including the White House, and the SEC,' SEC Inspector General David Kotz said in an interview with the Center for Public Integrity.

He also noted upon enactment, he would immediately "become a lame duck' that could have "a significant impact on our ongoing investigations.'  

Both are weak arguments.  The comment about the conduct of the investigation is steeped in irony.  He is arguing against any step that might compromise the post and make it difficult to "convince the public."  Yet he did exactly that when he announced the investigation on Fox News.  If he finds evidence of improper connections, it will look political.  If he finds evidence of no connections, he will be criticized for having undertaken the investigation to begin with.  Either way, it will be tough under current circumstances to "convince the public."

Unfortunately, there is nothing in the comment that speaks to the difficult structural issues involved in the decision.  In short, it does little to help the SEC resolve this issue in a manner best for the Agency.

Full post as published by The Race to the Bottom on May 13, 2010 (boomark / email).