Harvey L. Pitt
26th Chairman of the Securities and Exchange Commission
In office
August 3, 2001 – February 18, 2003
PresidentGeorge W. Bush
Preceded byArthur Levitt
Succeeded byWilliam H. Donaldson
Personal details
Born (1945-02-28) February 28, 1945 (age 76)
Brooklyn, U.S.
Political partyRepublican
Alma materBrooklyn College (B.A.)
St. John's University (J.D.)

Harvey L. Pitt (born February 28, 1945) is an American lawyer who served as the 26th chairman of the U.S. Securities and Exchange Commission (SEC), from 2001 to 2003.

History

Pitt graduated from Stuyvesant High School in 1961.[1] He graduated from Brooklyn College with a bachelor's degree in 1965, and from St. John's University School of Law with a JD degree in 1968.[1][2] He later received the Presidential Medal of Distinction from Brooklyn College in 2003[3][4] and an honorary LLD from St. John’s University School of Law.[4]

From 1968 to 1978, Mr. Pitt served on the staff of the SEC, eventually becoming the agency's youngest general counsel in 1975 (at age 30).[5][6] In between his two tenures at the SEC, Pitt was a senior partner at Fried, Frank, Harris, Shriver & Jacobson, where he represented clients such as: Lloyds of London, the New York Stock Exchange, Fortune 500 corporations,[7] and “virtually all the exchanges and investment houses.”[5] Pitt was later the chairman of the SEC, serving for eighteen months[8] between 2001 and 2003 (rather than his full five-year term), before he resigned abruptly during a wave of criticism.[9][10][11]

Notable Accomplishments

As the 26th Chairman of the SEC, Mr. Pitt, among other things, oversaw the SEC's response to the market disruptions resulting from the terrorist attacks of 9/11, for which he was lauded as a “voice of calm.” [12] Further, Mr. Pitt was the “architect of the new rule requiring executives of large companies to personally certify their financial results.” [13] Mr. Pitt Created the SEC's "real time enforcement" program—a policy designed to make the SEC's enforcement initiatives more efficient and effective for the protection of investors[14] and led the SEC's unanimous adoption of dozens of rules implementing the Sarbanes-Oxley Act of 2002.[15]

Criticism and resignation

In July 2002, The New York Times wrote: "Democratic and Republican members of Congress joined administration officials today in ridiculing Harvey L. Pitt's request that his pay be increased and his job as chairman of the Securities and Exchange Commission be elevated to cabinet rank ... evoking an outpouring of bipartisan scorn."[16] Pitt had tried to insert a provision into corporate antifraud legislation that would increase his pay by 21%, and also elevate his status to that of cabinet level, on a par with the secretary of state and attorney general, at a time when the stock markets had sunk to five-year lows and some congressional leaders were calling for him to resign.[17][18][19] Tom Daschle, the Senate majority leader, who had previously called for Pitt to be dismissed, said: "Of all the things he has to think about, it is amazing to me that this is what he's spending his time thinking about. I think it makes our point, the point many of us had, that he is not qualified to serve in that position."[16]

Pitt became the target of criticism when the Enron scandal broke out on his watch. Democrats alleged that he was too close to the accounting industry[20] and that he subverted efforts to tighten regulation in the wake of the Enron scandal and other cases of corporate malfeasance.[21][22][23][24] Pitt has also been blamed for not investigating millions of dollars made due to "put options" placed on United, and American Airlines just prior to Sept. 11, 2001. He also raised concerns when he met privately with former clients of his while they were subjects of SEC investigations.[25]

Pitt resigned after attempting to appoint a board member (78-year-old William Webster) who chaired the audit committee of a company under SEC investigation for fraud and accounting irregularities, while it lacked internal controls, to head a commission overseeing the accounting industry—without informing the White House or the other SEC Commissioners that Webster was under scrutiny for his involvement in a corporate accounting fraud investigation.[10][26][11][21] Democratic Senator Paul Sarbanes, Chairman of the Senate Banking Committee, called for Pitt's resignation.[26] Republican Senators including Mike Enzi (Wyoming), the only accountant in the Senate, and Richard Shelby (Alabama) joined John McCain in criticizing Pitt.[27] The U.S. Chamber of Commerce withdrew its support of Pitt.[27] A GAO report later criticized Pitt for his lack of diligence in the decision to name Webster to head the Public Company Accounting Oversight Board, while also finding that while Pitt was aware of the Webster fraud investigation he was not aware of certain details.[28]

Upon his resignation from the SEC in November 2002 after what the New York Times called "a political firestorm over his selection of the head of a new board overseeing the accounting profession", which led to four investigations of his actions, CFO Magazine wrote:

"Harvey Pitt may be gone, but what he left undone can’t be forgotten. The perpetually embattled chairman of the Securities and Exchange Commission resigned on Election Night after 15 tumultuous months in office. Criticized for being too close to his former Wall Street clients, unable to build consensus, and arrogant to boot, he finally succumbed to criticism over his selection of William Webster to head the Public Company Accounting Oversight Board."[17][9]

Pitt was just the second SEC Chairman to resign abruptly as a result of political turmoil.[17] Slate magazine wrote: "Of all Pitt’s transgressions, none has been more pathetic than his self-pitying denunciations of 'guilt by occupation.' ... He accepted seedy clients not out of principle, but because he wanted to be a player, and because he wanted the money and publicity such assignments generated."[29] In November 2002 journalist Calvin Trillin wrote a ballad about him, based on Sondheim's "Demon Barber," that began "Attend the tale of Harvey Pitt, Who many thought was quite unfit".[30]

When Pitt was asked in 2005 if he believed he could have left the SEC on a better note if he had stayed longer, he replied: "I feel I left on a very high note."[31]

Other

Pitt received an honorary LL.D. degree from St. John's University School of Law in 2002, and received the President's Medal of Distinction from the President of Brooklyn College in 2003. He is a columnist with Compliance Week.

He is now the Chief Executive Officer of the strategic consulting firm, Kalorama Partners, LLC.[32]

References

  1. ^ a b Editorial Staff (2001-07-31). "The SEC's New Pit Bull: But Religious Right' Want Another Chairman". Traders Magazine. Retrieved 2020-04-22.
  2. ^ "Harvey Pitt 65'". Brooklyn College Foundation. Retrieved 2020-04-22.
  3. ^ "pitt". www.brooklyn.cuny.edu. Retrieved 2020-04-22.
  4. ^ a b "Harvey L. Pitt". aseca.memberclicks.net. Retrieved 2020-04-22.
  5. ^ a b Labaton, Stephen (2001-09-14). "AFTER THE ATTACKS: THE REGULATOR; In Eye of Storm, A Voice of Calm From Washington". The New York Times. ISSN 0362-4331. Retrieved 2020-04-22.
  6. ^ "The scapegoating of Harvey Pitt". Institutional Investor. Retrieved 2020-04-22.
  7. ^ Newswires, Dow Jones (2001-05-10). "Bush Names Washington Lawyer Pitt To Head the SEC, Succeeding Unger". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-04-22.
  8. ^ Peterson, Jim (2017-07-03). Count Down: The Past, Present and Uncertain Future of the Big Four Accounting Firms - Second Edition. Emerald Group Publishing. ISBN 978-1-78714-701-0.
  9. ^ a b "Hello, I Must Be Going," CFO.
  10. ^ a b Jeanne Cummings, Yochi Dreazen and Michael Schroeder. "SEC Chairman Pitt Resigns Amid Webster Controversy; The Embattled Chief's Missteps Left Him With Few Allies; Fury Inside White House," The Wall Street Journal.
  11. ^ a b Dan Ackman. "Pitt Goes Quietly In A Loud Night," Forbes.
  12. ^ Labaton, Stephen (September 14, 2001). "After the Attacks: The Regulator; In Eye of Storm, A Voice of Calm from Washington". The New York Times.
  13. ^ Labaton, Stephen (August 18, 2002). "Private Sector; Pitt's Rules: Lawyers Out, Bartenders In". The New York Times.
  14. ^ For a description of the SEC’s “real time” enforcement policy, see S. Cutler, “Remarks at the Glasser LegalWorks 20th Annual Federal Securities Institute” (Feb. 15, 2002), available at https://www.sec.gov/news/speech/spch538.htm.
  15. ^ Pub. L. 107-204, 116 Stat. 745 (Jul. 30, 2002).
  16. ^ a b Stephen Labaton. "S.E.C. Chief Draws Ridicule In Quest for Higher Status," The New York Times.
  17. ^ a b c "S.E.C.'s Embattled Chief Resigns In Wake of Latest Political Storm," The New York Times.
  18. ^ "SEC Harvey Chairman Pitt shows a tin ear," Houston Chronicle.
  19. ^ "Lawmakers blast Pitt's pay request" - Houston Chronicle
  20. ^ Milbank, Dana (July 11, 2002). "SEC Chairman Pitt A Potential Liability To Administration; Bush Defends Regulator From Critics". The Washington Post. p. A6.
  21. ^ a b Jerry W Markham. A Financial History of Modern U.S. Corporate Scandals: From Enron to Reform - Google Books
  22. ^ Curtis J. Milhaupt, Katharina Pistor (2008). Law & Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World - Google Books
  23. ^ Charles Gasparino, Susan Pulliam and Michael Schroeder. "Critics Want SEC Chairman Pitt To Step Away From Enron Probe," The Wall Street Journal.
  24. ^ "Firing offense" - Center for Security Policy
  25. ^ "Harvey Pitt Glance" - Midland Daily News
  26. ^ a b Bill Saporito. "Harvey's Pittfalls," TIME.
  27. ^ a b "SEC chief Pitt resigns under fire" - MarketWatch
  28. ^ Thomas S. Mulligan (December 20, 2002). "GAO Report Finds SEC Failures," Los Angeles Times.
  29. ^ Daniel Gross. "The Pitt; Why SEC Chairman Harvey Pitt has failed," Slate.
  30. ^ Obliviously On He Sails: The Bush Administration in Rhyme - Calvin Trillin - Google Books
  31. ^ "Ex-SEC chief tells it his way" - SFGate
  32. ^ "Harvey Pitt - Chief Executive Officer". Kalorama Partners, LLP. Archived from the original on January 20, 2012. Retrieved January 27, 2012.
Government offices Preceded byArthur Levitt Securities and Exchange Commission Chair2001 – 2003 Succeeded byWilliam H. Donaldson