Manifesto – Pitt the saviour?

Harvey Pitt is the 26th chairman of America’s Securities and Exchange Commission. And he may well find he will be its most famous.

That’s saying something: he has some famous names to follow. The first SEC chairman was Joseph Kennedy, father of JFK. But the last, Arthur Levitt, may be the best-known for his audit independence campaign.

However, all that looks set to change for the bearded Brooklynite because of Enron. Just six months into his job it is clear the scandal and its fallout will dominate his time in office.

Alhough questions are being asked, chief among them is: is he the right man for the job? This is nothing to do with his expertise on securities law – within the US there are few viewed as more knowledgeable. His background though is causing some concern.

Pitt, 56, has spent the past 25 years as a Washington-based private securities lawyer defending the leading lights of Wall Street from the prying eyes of SEC.

In 1999 he successfully defended the New York Stock Exchange against SEC charges involving the actions of floor traders.

He was also head of the Wall Street trade group, the Securities Industry Association, and represented the American Institute of Certified Public Accountants.

And among the poacher turned gamekeeper’s many illustrious clients has been all the major accountancy firms including one called Andersen.

Some Democrat politicians have already voiced concerns and suggested that, a la John Ashcroft the attorney general, Pitt should step aside from the Enron investigations.

His response has been belligerent. Pitt has attacked the accountancy profession for its lack of probity and its audit failures.

He has already instigated the demise of the audit regulation body, the Public Oversight Board, and wants a new powerful regulator brought in.

This role could fall to his old friends at the AICPA.

Supporters point out that he also represented, unsuccessfully, PwC and Ernst and Young against Andersen over the battle on whether accounting firms should be allowed to consult for their audit clients. And the fact that he has taken a pay cut of over #1m a year at least suggests he really wants to do the job.

Whether he succeeds may be out of his hands. Enron’s reach goes to the very top of American political life. Pitt may well find that any good intentions on his part will ultimately succeed or fail on what the politicians want.

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