August 2001

Pitt Confirmed as New SEC Chair

WASHINGTON—Securities lawyer Harvey Pitt was confirmed by the U.S. Senate as the new commissioner for the Securities and Exchange Commission earlier this month.

Pitt replaced acting Chair Laura Unger, who took over after Arthur Levitt resigned in February. Since leaving, Levitt has rejoined M&T Bank Corp.’s board as an advisory director. He previously served on the board from 1987 to 1993.

The Senate’s confirmation officially places Pitt into the seat vacated by Paul Carey, who died in June.

“He brings unprecedented expertise to the office of chairman, and I’m certain he will share my desire to promote competition, efficiency and capital formation, and to bring the benefits of technology to investors,” the Associated Press reported Rep. Michael Oxley (R-Ohio), chairman of the House Financial Services Committee, as saying.

“Mr. Pitt’s work at the SEC and representing clients brought before the SEC give him an extraordinary knowledge of federal securities laws. I am hopeful that…he will use this knowledge and experience to better protect investors and enhance the quality and integrity of securities markets,” said Sen. Paul Sarbanes (D-Md.), who attended Pitt’s confirmation hearing as chair of the Banking Committee.

Pitt, a Republican who served as the Commission’s general counsel under the Carter administration, was a senior partner at the New York law firm of Fried, Frank, Harris, Shriver & Jacobson. The new SEC Chair has represented well-known clients, including the American Institute of CPAs and the Securities Industry Association—a fact some sources say could present him with conflict-of-interest problems in the new position.

While speaking publicly for the first time since his nomination in July, Pitt assured that his former work as a securities practice lawyer would not cause conflicts of interest for him as the new chair.

During his July confirmation hearing before the Senate Banking Committee, Pitt vowed to ensure compliance with regulations that protect investors, The Washington Post reported. Pitt said he would “ensure vigilant enforcement of sound rules that protect all investors against fraudulent, deceptive and manipulative misconduct.”

“Harvey Pitt has represented industry sources aggressively and successfully against the SEC,” said John C. Coffee Jr., an expert on securities regulation at Columbia Law School. “Nonetheless, we will see a reversal…He will not push the envelope on certain issues like Arthur Levitt did. But he will be an aggressive enforcer.”

In July, Pitt also said he would scrutinize the agency’s mandates and procedures with the intention of decreasing them and reducing their complexity.

During his confirmation hearing, Pitt informed the Senate committee that the point of his review would be to lessen costs and to deter investors from moving their holdings to offshore accounts where they “often lack protection of the laws the Commission enforces,” The New York Times reported.

“Our securities laws are, in the main, nearly 70 years old, and reflect a time and a state of technology light-years away from what we now confront daily. Commission rules are rapidly becoming the securities equivalent of the Internal Revenue Code, making it difficult for those obliged to comply with the rules to understand their obligations, and making it impossible for those who benefit from those rules to understand the rights they have and how to enforce them,” Pitt said.

In recent years, previous endeavors to revise the securities rules were unsuccessful when, during the Clinton administration, Levitt introduced a number of suggested amendments to the regulations, known collectively as the aircraft carrier proposal.