The head of the Securities and Exchange Commission will have no involvement in the agency's investigation of accounting at a company where he had served on the audit committee, the agency said Friday.
SEC Chairman William Donaldson has recused himself under government ethics rules from the investigation into EasyLink Services Corp., the technology company where he was a director and member of the board's audit panel until he resigned in November 2002. A month later he was named SEC chairman by President Bush.
"Chairman Donaldson has not participated and will not participate in any matter before the commission involving EasyLink," the SEC said in a statement.
The Piscataway, N.J.-based company, which provides e-mail and other services for businesses, confirmed Thursday that the SEC was examining its accounting for some $3 million in revenue in 2000 from its advertising network business.
Donaldson, a former chairman of the New York Stock Exchange, became a director of EasyLink in April 1998. EasyLink was established in 1995 by Gerald Gorman, an investment banker who had worked at Donaldson, Lufkin & Jenrette, the Wall Street firm that Donaldson co-founded.
As a member of the audit committee starting in early 2000, Donaldson was charged to act as a watchdog over the company's accounting. He also sat on the compensation committee starting in mid-1999.
EasyLink had previously been criticized for excusing a loan made to chief executive Thomas Murawski, a decision taken when Donaldson was a director.
As SEC chairman, Donaldson normally would receive updates from agency attorneys on the course of an investigation and would vote along with the other four commissioners on any enforcement action to be brought or settlement to be reached. By recusing himself, he will have no knowledge or involvement in the inquiry.
The SEC also said in the statement that Daniel Nathan, a former SEC attorney who now is an enforcement official at the Commodity Futures Trading Commission, will act as a special adviser to monitor the EasyLink investigation to ensure that it is properly and thoroughly carried out.