The Securities and Exchange Commission has opened an inquiry into former FBI and CIA director William H. Webster's role as head of the audit committee of a company being investigated for fraud by the Justice Department, SEC and industry sources said yesterday.

The inquiry by General Counsel Giovanni P. Prezioso is the second to be opened at the agency in as many days into SEC Chairman Harvey L. Pitt's selection to head a new accounting oversight board. The SEC approved Webster by a contentious 3 to 2 party-line vote Oct. 25, with Republicans in the majority.

The board, which is intended to restore investor confidence, was mandated by Congress this past summer in response to a series of accounting and other business scandals over the year that have cost shareholders and employees billions of dollars. The selection process is the latest in a series of controversies that have clouded Pitt's 14-month tenure at the SEC, and it has caused many officials in government and on Wall Street to question how long the White House will keep supporting him.

Also yesterday, BDO Seidman, which was the auditor at Washington-based U.S. Technologies Inc. until being fired in August 2001, disputed and threatened possible legal action over Webster's account of when it told the audit committee about recordkeeping problems at the company, which is now insolvent.

The first SEC inquiry was opened Thursday by the agency's inspector general, Walter J. Stachnik, after he learned that Pitt failed to inform the agency's other commissioners about Webster's involvement with U.S. Technologies before the vote approving the appointment.

The inspector general's probe will focus on the process surrounding Webster's selection, including why Pitt and SEC Chief Accountant Robert K. Herdman failed to disclose to other agency commissioners Webster's own concerns about his ties to the firm, according to Stachnik and others at the agency.

The agency's general counsel, who will be aided by staff members from its enforcement division, will focus on Webster's role as a director of U.S. Technologies and head of its audit committee from 2000 until July.

The investigation is intended, in part, to help Pitt's fellow commissioners decide if Webster's ties to U.S. Technologies could cloud public confidence in Webster and the auditing oversight board, SEC sources said.

Commissioner Cynthia A. Glassman, a Republican, confirmed the general counsel's inquiry and said she is reserving judgment on the actions of Pitt and Webster until she learns the facts from the probes.

Webster said in an interview yesterday that he has no plans to step down as head of the new board.

"I intend to carry out my responsibilities until it's clear that my presence on the board would in any way affect the achievement of its objectives," he said. "The only question I could see that's of any importance is whether we fired BDO because they warned us about something, and that is completely not the case."

BDO Seidman contended that it told the audit committee about the problems during a July meeting. In an interview this week, Webster said the accounting firm did not relay that information until after it was dismissed in August.

Webster said BDO was dismissed because it was taking too long to do audits and charged too much.

Another member of the three-person audit committee, Arthur Maxwell, has backed Webster's version.

BDO said it is "alarmed and disappointed" by those accounts and "is considering its legal alternatives available to correct that misinformation." A BDO spokesman would not elaborate.

A source familiar with the investigation said BDO has been told by the U.S. attorney's office in Manhattan that it is going to be subpoenaed for records in connection to a fraud investigation of U.S. Technologies.

In addition to the two SEC inquiries, the selection of Webster is being investigated by the General Accounting Office, the investigative arm of Congress, under a request from Democratic lawmakers, several of whom have called on Pitt to resign.

Webster has said that more than a week before the SEC voted on his selection, he told Pitt that there could be "allegations" against U.S. Technologies and expressed concern that such an event could pose a problem for his nomination.

Webster said Pitt told him he would look into it, which SEC sources said Pitt did by asking Herdman to investigate. Later that week, Webster said, Pitt told him the issue was not a problem, and neither Pitt nor Webster informed the other commissioners about it.

Staff writers David S. Hilzenrath and Renae Merle contributed to this report.

The choice of William H. Webster to head an accounting oversight board has drawn fire from Democrats.