(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Federal Reserve Official Named to Head PCAOB

The SEC announced that it unanimously selected William J. McDonough as its nominee to be the new chairman of the five-member Public Company Accounting Oversight Board established pursuant to the Sarbanes-Oxley Act. He will take office upon formal appointment by the Commission. As required by the Sarbanes- Oxley Act, the SEC nominated Mr. McDonough after consultation with the chairman of the Federal Reserve Board and the Secretary of the Treasury.

Mr. McDonough has served as president of the Federal Reserve Bank of New York since 1993. In that capacity, he serves as the vice chairman and a permanent member of the Federal Open Market Committee. Prior to joining the Federal Reserve, Mr. McDonough spent 22 years at First Chicago Corp. and the First National Bank of Chicago. He retired from the bank in 1989 as vice chairman of the board and a director. He had also served with the U.S. Department of State. Mr. McDonough earned a bachelor's degree in economics from Holy Cross College and a master's degree in economics from Georgetown University.

Mr. McDonough stated that "the task before us is to restore the confidence of the American people and others around the world that the accounting statements issued by public companies registered in our country and certified by public accounting firms present a complete, true and timely report that can be relied on." Noting that the Sarbanes-Oxley Act was passed in response to corporate scandals, he added that he "fully supports the intent and purpose" of the act. "Confidence in the accuracy of accounting statements is the bedrock of investors being willing to invest, in lenders to lend, and for employees knowing that their firm's obligations to them can be trusted," he asserted, and he emphasized that "it would be difficult to understate the importance to our country, particularly now, of maintaining its well-earned reputation as a safe and respected nation in which to do business."

The Sarbanes-Oxley Act requires that the chairman be a "prominent individual of integrity and reputation who has a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosure required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures." Mr. McDonough will relinquish his current responsibilities at the Federal Reserve Bank of New York prior to assuming the chairmanship. In addition, the SEC will complete a thorough background investigation prior to Mr. McDonough's formal appointment.