Risk & Compliance

But Does This Qualify as Full Disclosure?

Harvey Pitt sworn in privately as new SEC chairman.
Alix StuartAugust 7, 2001

Ever so quietly, the guard has changed at the SEC.

In a private ceremony conducted on Friday in Washington, Harvey Pitt was sworn as the new chairman of the Securities and Exchange Commission. This, according to a source close to the SEC.

SEC spokesman John Heine confirmed that Pitt was sworn in during an “informal” ceremony. “A formal public ceremony will take place at some time in the future,” he says.

Pitt, who was confirmed as SEC Commissioner by the Senate last Thursday, is thought to be on vacation. But before leaving, he appointed a new chief of staff. David Levine, the SEC’s former chief of staff, will reportedly return to the enforcement division. Levine could not be reached for comment.

His reassignment is the first of many expected staff changes at the Commission. Some SEC-watchers believe Pitt will be aggressive in replacing staffers brought in by former Chairman Arthur Levitt, who stepped down from the post in February. Levitt, who was appointed by President Clinton, served as SEC chairman for eight years. “Pitt clearly wants to put his own mark on the place,” says the source.

Two prominent SEC officials have already left the agency: Richard Walker, former director of the enforcement division, and Lynn Turner, former chief accountant. Another commissioner spot remains open due to the death of Paul Carey in June.

Pitt, a former securities lawyer, has said that he plans to undertake a sweeping review of the securities laws “to be certain that they are sound, reasonable, cost effective, and that they promote competition.” At his confirmation hearing last month before the Senate Banking Committee, Pitt note that many securities laws are obsolete and pose an unfair burden on market participants. Regulation FD — the disclosure requirement that took effect in October — is likely to be on the list for review. Ironically, that regulation has been criticized by some corporate executives as actually restricting the flow of information between companies and shareholders.

Indeed, some observers say Pitt’s coming is good news for corporates. “For the accounting profession, I expect this new leader will not be as aggressive as Levitt was,” says Arthur Bowman of Bowman’s Accounting Report. At the same time, however, Pitt has promised to fervently enforce rules protecting investors.

Pitt succeeds Laura Unger, who has been acting head of the SEC since Levitt exited in February. During her brief tenure, Unger continued many of Levitt’s principles, including a steadfast protection of investors. One of Unger’s most controversial decisions was to call for greater disclosure from US-listed foreign companies that conduct business with countries under US sanctions. Some observers believe Pitt may reverse that policy.