Harvey Pitt, who had turbulent reign as SEC chairman, dies at 78

Harvey Pitt, who had turbulent reign as SEC chairman, dies at 78

Harvey L. Pitt, who was appointed chairman of the Securities and Change Fee in 2001 and pressured into resigning 15 months later after political missteps and an ill-timed push for extra cooperative relations with the companies he was accountable for regulating, died Could 30 at a hospital in Washington. He was 78.

A household assertion introduced the dying however didn’t present a trigger.

Earlier than he received the highest job on the SEC, which he described as his lifelong ambition, Mr. Pitt was extensively thought to be one of many nation’s foremost authorities on securities legislation. Employed as an SEC employees member at age 23, he was promoted seven years later to grow to be the company’s youngest basic counsel ever.

He subsequently started a profitable reign throughout personal observe, on the worldwide legislation agency Fried, Frank, Harris, Shriver & Jacobson in Washington. A number of secretaries have been wanted to assist him juggle the fixed calls for of his purchasers, together with the “Large 5” accounting companies, the New York Inventory Change, the brokerage agency Merrill Lynch and the insurance coverage goliath Lloyd’s of London.

When President George W. Bush nominated him to move the SEC, Mr. Pitt had admirers on either side of the aisle. Sen. Charles E. Schumer, a New York Democrat, referred to as him “the Zeus” of the securities subject. The Senate confirmed him in early August 2001 in a routine voice vote.

Six weeks later, Mr. Pitt was praised for responding shortly and calmly to the monetary results of the Sept. 11, 2001, terrorist assaults, which ruptured communications hyperlinks on Wall Road and compelled a short lived closing of securities markets. A day after the assaults, he took a prepare to a still-smoldering New York for talks with Wall Road leaders and representatives of telecommunications suppliers.

Mr. Pitt, a Republican, was wanting to differentiate himself from his Democratic predecessor, Arthur Levitt, a President Invoice Clinton appointee who led the SEC for almost eight years and generally clashed with Republicans demanding deregulation of economic markets.

Mr. Pitt needed the company to take a much less confrontational strategy to regulation and rulemaking. “Someplace alongside the best way, accountants turned afraid to speak to the SEC, and the SEC seemed to be unwilling to hearken to the career,” he mentioned in an October 2001 speech. “These days are ended.”

In an interview with The Washington Put up, he promised to make the SEC “a kinder, gentler place for everybody.”

In the meantime, the vitality conglomerate Enron — beforehand a darling of Wall Road — was starting its spectacular collapse into chapter 11 amid disclosures that it had falsified its accounts, a scandal that quickly engulfed and destroyed Enron’s auditor, Arthur Andersen.

Enron’s fall and different accounting scandals of the period made Mr. Pitt’s emphasis on pleasant chats and self-regulation appear naive and suspect. Although Mr. Pitt and his supporters insisted he was all the time able to crack down on abuses, he was caught with the fallacious picture as enterprise icons crumbled, greed may not be seen as even remotely good, and politicians needed to point out that they have been powerful on fraud.

Mr. Pitt was particularly weak to criticism as a result of he had spent 23 years as a non-public lawyer, not simply representing securities and accounting companies but in addition Ivan Boesky. He helped the inventory speculator negotiate with investigators to attenuate his jail time and fines for insider buying and selling. Boesky agreed to pay a $100 million advantageous and was sentenced to 3 years in jail.

Giving extra ammunition to critics, Mr. Pitt prompt that his place as SEC chairman must be elevated to Cupboard rank and that his pay must be elevated accordingly.

In the meantime, Mr. Pitt strove to show his more durable aspect and ordered high executives to certify the accuracy of their monetary statements, however his political backing dwindled. In October 2002, his help from the White Home collapsed amid criticism of his choice to push William Webster, a former director of the CIA and FBI, as a candidate to move a brand new accounting-oversight board, although Webster had chaired the audit committee of an organization going through fraud accusations.

In early November 2002, Mr. Pitt wrote a resignation letter saying “the turmoil surrounding my chairmanship” was making it exhausting for the SEC to do its work. He remained within the publish for a number of extra months earlier than the Bush administration tapped a successor, William H. Donaldson, a founding father of the funding financial institution Donaldson, Lufkin & Jenrette and chief govt of the health-care large Aetna.

Cynthia A. Glassman, a Republican who served as an SEC commissioner whereas Mr. Pitt was chairman, mentioned it was a misperception that he was delicate on accounting companies and enterprise on the whole. She mentioned he vigorously carried out his SEC duties however wasn’t absolutely attuned to political winds. “He wasn’t a political creature,” she mentioned.

Harvey Lloyd Pitt was born in Brooklyn on Feb. 28, 1945. His dad and mom have been Jewish immigrants from Poland. His father, who left college across the sixth grade, labored for the Waldbaum’s grocery shops, first as a delicatessen employee and later as a supervisor. (The Pitt household described him as “one of the best lox cutter within the Western Hemisphere.”) His mom was a seamstress.

He acquired a bachelor’s diploma in political science from Brooklyn Faculty in 1965 and received a scholarship to review legislation at St. John’s College in Queens, the place he graduated three years later.

After an preliminary plan to concentrate on labor legislation, he shifted to securities legislation “nearly by a fluke,” he mentioned in an oral historical past with the SEC Historic Society. The change got here when he represented St. John’s at a nationwide moot courtroom competitors. Dealing with a workforce from Columbia College, he made arguments in a case involving individuals who had misplaced cash due to improperly audited accounts, one thing that may come up in actual life when Enron crashed.

Although Mr. Pitt’s workforce didn’t win the competitors, his mastery of the arcane subject material so impressed a consultant of the SEC that he was invited to use for a job on the company. He joined the final counsel’s workplace and swiftly acquired promotions.

His first marriage, to Phyllis Yagerman, resulted in divorce. In 1984, he married Sarah “Saree” Ruffin. Along with his spouse, survivors embody two youngsters from his first marriage, Emily Pitt and Jonathan Pitt; two youngsters from his second marriage, Robert Pitt and Sara “Sally” Pitt Plowden; a sister; and three grandchildren.

Mr. Pitt spent the previous twenty years as chief govt of Kalorama Companions, a Washington-based consulting agency targeted on regulatory compliance and company governance. He additionally contributed opinion essays to the Wall Road Journal.

Shortly after Mr. Pitt resigned from the SEC in 2002, a legislation agency associate at Fried Frank advised the New York Occasions there was a “great paradox” in his former colleague having left a thriving observe to satisfy his ambition as chair of the watchdog company.

“If Harvey had stayed at Fried Frank by means of the final yr,” the associate mentioned, “he would have had the best observe on the planet as a result of each troubled firm from Enron down would have needed him to signify them.”


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