Bush names a toothless watchdog head of the SEC:
quote.bloomberg.com
05/07 16:30
White House to Name Lawyer Harvey Pitt as SEC
Chair (Update3)
By Neil Roland
Washington, May 7 (Bloomberg) -- Harvey L. Pitt, a Washington lawyer who has
represented Merrill Lynch & Co., the New York Stock Exchange and international
accounting firms, is President George W. Bush's choice to head the Securities
and Exchange Commission.
The Bush administration may announce Pitt's nomination as early as this week,
a White House official said.
Pitt, a Republican, would succeed Democrat Arthur Levitt if his nomination is
approved by the U.S. Senate. Republican Commissioner Laura Unger has been
filling in as acting chairman since February during a search that considered
candidates from Wall Street, private industry and law.
``The Bush administration has not shown any tendency to be strong regulators,
but I think they might be surprised by Harvey,'' said former SEC Chairman Harold
M. Williams, who was Pitt's boss during former President Jimmy Carter's
administration. ``He's likely to be a conscientious enforcer, based on his deep
understanding of securities laws.''
Pitt, 56, declined to comment. He was the SEC's general counsel during the late
1970s and since has become one of the top U.S. securities lawyers. While
representing securities firms and accountants, he has opposed some of Levitt's
causes on opening information to investors and dealing with auditors' potential
conflicts.
`Pushing the Envelope?'
``Who does corporate America and individuals call on when they get into trouble
with the SEC?'' former SEC enforcement director William McLucas said of Pitt.
``He's one of the leading, if not the leading, guy to get those calls.''
Pitt, whose nomination is all but assured, would be the first one-time SEC insider
tapped for the top post of the federal watchdog agency since Manuel Cohen in
the 1960s.
Besides vigorous enforcement of current laws, Pitt is ``not likely to share Arthur
Levitt's interest in pushing the envelope on policies aimed at individual investors,''
said Columbia University law professor John Coffee.
Pitt has been a critic of the SEC's Regulation Fair Disclosure, which forbids
selective disclosure of company news. While it was still a proposal, he said any
rule ``could create a serious problem for public companies that may be made
afraid to talk to analysts at all.''
Regulation FD, which requires companies to make market- sensitive information
available to all investors at the same time, went into effect last October. It was
championed by Levitt and opposed by Unger.
Criticized Proposal
Pitt, while representing large U.S. accounting firms, also criticized an SEC
proposal that sought to avoid conflicts of interest among auditors whose firms
also provide consulting services.
``Performance of non-audit services can improve the audit function,'' he wrote in
June 1998. The SEC proposal, pushed by Levitt, was approved by the
commission last November.
Pitt, while in private practice, also supported the 1995 Securities Litigation
Reform Act, which sought to curb securities class-action lawsuits against
companies whose stock had fallen.
His selection was reported earlier today by the Wall Street Journal.
Pitt, a partner with the Fried Frank Harris Shriver & Jacobson law firm, was the
SEC's general counsel from 1975 to 1978. He worked at the federal agency for
10 years.
He since has represented a range of high-profile clients, including financier Ivan
Boesky, Lloyd's of London, and Microstrategy Inc. Chairman Michael Saylor.
Campaign Contributions
In the 2000 elections, Pitt contributed $14,000 to Republican candidates,
including $1,000 to George W. Bush and $2,000 to Senate Judiciary Committee
Chairman Orrin Hatch of Utah, according to the Center for Responsive Politics, a
nonpartisan group that tracks contributions.
Pitt would head what will soon be a Republican majority at the five-member
commission. Unger's term expires next month, and Bush has a vacant
Republican slot to be filled.
``He's not capable of being a low-profile chairman, based on his personality, his
ability, and his energy,'' Coffee said. The SEC chairman will have to work closely
with Senate Banking Committee Chairman Phil Gramm, a Texas Republican who
takes an active interest in SEC policy.
``Harvey's a consensus builder,'' said former federal judge Stanley Sporkin, who
hired Pitt as his own lawyer when the judge was challenged by the German
government on a Holocaust-related case. ``He'll listen to Gramm, though I've
never known anyone to push him around.''
A Gramm spokeswoman declined comment.
Pitt is co-chairman of an American Bar Association fraud task force and a
member of the National Association of Securities Dealers' legal advisory board.
He is co-author of a seven-volume treatise called ``The Law of Financial
Services,'' and has taught at the University of Pennsylvania Law School,
Georgetown University Law Center and George Washington University Law
School.
Pitt graduated from Brooklyn College and received his law degree from St. John's
University Law School.
Since retiring as SEC chairman, Levitt has become a director of Bloomberg LP,
the parent company of Bloomberg News. |
