The SEC's New Pit Bull: But Religious Right' Want Another Chairman
Traders Magazine, July 2001
Harvey L. Pitt, the Bush administration's designated chairman of the Securities and Exchange Commission, once represented one of Wall Street's most notorious insider-trading violators, Ivan F. Boesky. Known as a shrewd negotiator, he managed to win a reduced sentence for Boesky in exchange for his testimony against co-conspirator Michael Milken.
Pitt, 56, the Washington-based managing partner at the blue-chip, law firm of Fried, Frank, Harris, Shriver & Jacobson, has a distinguished record in representing many of the entities that he will regulate. He successfully defended the New York Stock Exchange in the SEC's investigation of personal trading practices by the exchange's floor brokers. The SEC ordered no sanctions against the Big Board even though the agency had punished other self-regulatory organizations for similar improprieties.
A Republican, Pitt is no stranger to the SEC. He worked there for ten years and was the agency's general counsel under President Jimmy Carter. Pitt also has an avid interest in the SEC's history. He is president and a founding trustee of the SEC Historical Society.
The SEC's top post pays $133,700 a year. This is about what a first year associate earns at Pitt's law firm and is far less than the roughly $3 million he earned last year.
Pitt declined to be interviewed for this article. However, he made no bones about his view of SEC rulemaking at his confirmation hearings before the Senate Banking Committee.
"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," he told the committee. "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 is regarded as one of the most experienced and knowledgeable securities experts in the U.S. "The only issue is whether he can make a successful transition from extremely successful client advocate to advocate for the public interest," said Harvey J. Goldschmid, a former general counsel of the SEC in the Clinton administration and professor of securities and corporate law at Columbia University's School of Law.
Richard Roberts, a former SEC commissioner in President George Bush Sr.'s administration and a partner at the Washington law firm of Thelen Reid & Priest, believes that Pitt will be an independent voice at the SEC and that his past clients will not shape his opinions.
"Harvey is an independent guy," he said. "I don't believe the positions that an individual takes in private practice necessarily reflect the positions that he or she will take in government."
While some Wall Street pros and former SEC officials are cheering Pitt's nomination, there is one group that has some reservations about his appointment.
Surprisingly, most of these people, so-called religious conservatives, voted for President George W. Bush. Apparently, they are angered over the legal work that Pitt performed in 1999 on behalf of New Frontier Media, a Boulder, Colo.-based online distributor of sexually explicit videos and X-rated Web sites, such as "Teen Sex" and "Cafe Flesh."