Looks like Bush appointed a fox to patrol the hen house:
Critics Want SEC Chairman Pitt
To Step Away From Enron Probe
By CHARLES GASPARINO, SUSAN PULLIAM and MICHAEL SCHROEDER
Staff Reporters of THE WALL STREET JOURNAL
As Enron Corp. was imploding in December, Harvey Pitt, the new head of the
Securities and Exchange Commission, called a private meeting of the
accounting industry's top officials. The industry, already under pressure, was
facing questions about why Arthur Andersen LLP failed to detect financial
woes at the energy trader.
But Mr. Pitt didn't call for sweeping changes. Rather, people briefed on the
meeting say that the SEC chief -- after years as a private attorney representing
securities and accounting firms -- offered the accounting officials some advice:
Come up with a statement addressing growing concerns about the industry's
ability to audit large corporate clients.
What resulted surprised even some current and former SEC officials. The
statement from the Big Five and their trade group, the American Institute of
Certified Public Accountants, blamed the accounting system, not the
accountants themselves, for failing to require corporate clients to disclose
financial data that could have prevented the Enron debacle. Mr. Pitt
immediately posted the guidelines, including the group's proposal to "encourage
public companies to take immediate steps to improve their disclosures" on the
SEC's Web site.
The Big Five declined to comment. A
spokeswoman for Mr. Pitt says his meetings with
the industry are "old news," adding that AICPA's
petition was posted on the Web site as a result of
a new policy of Mr. Pitt's. "If it's a rule-making the
commission may act on, it's better to seek public
comment sooner rather than later," the
spokeswoman said.
Thursday, Mr. Pitt will say that the SEC and accounting firms are creating a
new private-sector oversight board to monitor that industry.
Still, some investors' lawyers are critical. "As a private attorney, Mr. Pitt earned
millions of dollars representing big Wall Street and accounting firms, including
Arthur Andersen," says Jacob Zamansky, a New York-based lawyer
representing investors. "As SEC chairman he appears to be siding with the
industry rather than the public investors whom he is charged to protect."
In any event, Mr. Pitt's ties to the financial industry put him in an awkward
position amid a major investigation by his agency into what went wrong at
Enron, and what role Arthur Andersen played in any misrepresentations Enron
made to investors. The big question: How well can Mr. Pitt, who represented
Andersen, as well as all the nation's big accounting firms, oversee a massive
inquiry into the largest accounting scandal in the nation's history?
--excerpt fyi |
