ASR No. 78 (1957): The Curious Case of the SEC versus W. W. Werntz, Former Chief Accountant

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Abstract

William W. Werntz, who became the second chief accountant of the United States Securities and Exchange Commission (1938-1947) at the age of 30, entered public accounting practice following completion of his term of SEC service. His initial assignment dealt with an SEC registrant, Seaboard Commercial Corporation, a publicly traded company. Subsequent to Werntz’s involvement in this engagement, the Commission filed a complaint that alleged a violation of Rule II(e) relating to a matter of improper professional conduct. In 1957, a decade after the events, the SEC issued Accounting Series Release No. 78 sanctioning Werntz, at a time when he was serving as chairman of the American Institute’s authoritative standard-setting body, the Committee on Accounting Procedure. This 1957 sanction marked only the second time that an accountant from a large CPA firm was admonished by the Commission. The issues related to this event provide a unique and curiously complex set of circumstances that impacted the career of Werntz. The authors analyze the facts and individuals involved in the episode to further the understanding of the nature and details of the matter.

Authors

• Dale L Flesher, University of Mississippi

• Gary John Previts, Case Western Reserve University