By Sarah N. Lynch
WASHINGTON Dec 21 A trustee of the foundation
that governs the U.S. accounting standard-setting board has
resigned, the foundation said on Friday, after the U.S.
Securities and Exchange Commission charged her in a case
involving toxic mortgage-backed assets.
Mary Stone stepped down from the Financial Accounting
Foundation, which oversees the Financial Accounting Standards
Board (FASB) and the Governmental Accounting Standards Board
(GASB). The FASB is the steward of the Generally Accepted
Accounting Principles (GAAP) system used by U.S. businesses.
Stone was one of eight former board members of Morgan
Keegan, now an affiliate of Raymond James Financial Inc,
who were charged earlier this month by the SEC with failing to
oversee managers who inaccurately priced mortgage-backed assets
ahead of the 2007-2009 financial crisis. [ID nL1E8NA3QE]
Robert Stewart, a foundation spokesman, said Stone did not
cite a reason for her resignation, which was effective Friday.
She had previously been on leave of absence since Dec. 10,
the same day the charges against her were filed.
Stone, 62, could not be immediately reached for comment at
the Culverhouse College of Commerce at the University of Alabama
where she works as a director at the accounting school.
In a previous statement, attorneys for six of Morgan
Keegan's independent directors named in the SEC matter,
including Stone, said their clients "emphatically deny" the
charges and "intend to contest this case vigorously."
Stone was appointed to the foundation in 2010. She began
serving in 2011. The names of appointees to the foundation, the
FASB and the GASB are sent to the SEC so its commissioners may
weigh in, but the commission does not have the power to reject
It was unclear if the SEC knew Stone was being investigated
at the time of her nomination. An SEC spokesperson declined to
comment, saying the agency does not discuss communications with
Stewart said he could not discuss the details of individual
appointments. He said generally candidates undergo background
checks and finalists' names are submitted to the SEC where
commissioners can have a chance to comment.
The FAF board of trustees ultimately votes on the nominees.
The SEC first charged Morgan Keegan, Morgan Asset Management
and two of its employees including James Kelsoe, a star manager
at the firm, in April 2010 with fraudulently overstating the
value of securities backed by subprime mortgages.
Morgan Keegan settled the case in June 2011, agreeing to pay
$200 million, while Kelsoe agreed to pay $500,000 in penalties
and be barred from the industry.
The SEC's recent charges against Morgan Keegan's directors
marked a rare instance in which the agency has taken action
against a mutual fund board.