Harvey Pitt, President Bush’s nominee to head the Securities and Exchange Commission, pledged to be tough on securities-law violators but also to give publicly traded companies and Wall Street firms a bigger voice in how the agency regulates them, reports the Wall Street Journal.
At a Senate Banking Committee hearing, Pitt, a Republican, for the first time outlined in broad terms his plans to review SEC regulations that may be burdensome to businesses and to overhaul decades-old rules governing the process for companies selling stock to the public, says the newspaper.
“I would like the SEC to lead a review of the regulations it imposes, to be certain they are sound, reasonable and cost-effective, and promote competition,” he said. Pitt said securities regulations now are akin in complexity to the Internal Revenue Code.
In particular, he said he plans to continue the SEC’s existing review of Regulation Fair Disclosure, the controversial rule that requires companies to make public material information at the same time it is conveyed to research analysts. He also said he will look at research analysts’ conflicts of interest.
The committee endorsed Pitt for the SEC job Thursday, and he is expected to be confirmed for a six-year term by the full Senate as early as next week. Committee Chairman Paul Sarbanes, a Maryland Democrat, said his panel has urged the White House to quickly fill other openings on the five-member commission. Currently, the SEC has only two members, acting chairman Laura Unger, a Republican, and Isaac Hunt, a Democrat. Both commissioners’ terms have expired.
Pitt is no stranger to the SEC. He served as the commission’s general counsel in the 1970s, after which he became a top securities lawyer in the Washington office of New York’s Fried, Frank, Harris, Shriver & Jacobson. In his financial-disclosure statement, he identified scores of clients he has represented, including several of the Big Five accounting firms, major Wall Street firms and several securities-industry trade groups. Mr. Pitt earned more than $3 million last year at the firm; the SEC job pays $133,700 a year.
Sarbanes questioned whether Pitt’s extensive work defending broker- dealers and companies facing SEC enforcement allegations would influence his ability to protect investor interests.
“I haven’t worked in this industry for 33 years to risk my reputation by doing anything other than what the public interest requires,” he responded.
Although Pitt avoided criticizing former chairman Arthur Levitt, his comments suggested that he believes the regulator needs to be less combative, says the Journal. Levitt’s 7½ -year tenure was marked by a focus on championship of the investor. In the process, the agency roughed up broker-dealers and stock issuers over such issues as broker compensation, accounting irregularities and auditors’ conflicts of interest. The enforcement division has aggressively pursued Internet and financial fraud.
“I will devote my total efforts to enhancing the commission’s responsiveness to all constituencies,” Pitt said.
The nominee said he would be tough on securities violators, vowing to refer repeat offenders for criminal prosecution. He also said he will push to speed up enforcement investigations, says the Journal.