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Beleagured SEC Chief Resigns Under Pressure

BY Admin  November 6, 2002 at 5:42 PM EDT

In a resignation letter addressed to President Bush, Pitt wrote, “rather than be a burden to you or the agency, I feel it is in everyone’s best interest if I step aside now, to allow the agency to continue the important efforts we have started.”

Pitt said the “turmoil” surrounding his tenure as SEC chief made it “very difficult” for him and other SEC staff to “perform their critical assignments.”

White House spokesman Ari Fleischer declined to specify when Mr. Bush would nominate a candidate to complete the remaining four years of Pitt’s term.

Pitt steps down just days after the SEC ordered an investigation into his selection of former FBI and CIA Director William Webster to head a new independent accounting oversight panel. Pitt allegedly failed to inform the four other commissioners that Webster had led the audit committee for U.S. Technologies, a company facing fraud charges, before the panel selected the new panel chair.

Webster on Tuesday indicated he might step down from the accounting panel, a decision he said he would announce after that night’s elections.

“If I conclude my ability to serve impedes on the ability of the board to function, I will step aside,” Webster told the New York Times. “This is not a job I sought. I won’t stay beyond the time I’m useful.”

Although the Bush administration had publicly praised Pitt’s work as SEC chair during his tumultuous 14-month tenure, The New York Times and The Washington Post quoted unnamed administration officials as saying Pitt’s handling of the Webster appointment ultimately cost him the president’s support.

But Fleischer today defended Pitt’s leadership of the SEC, saying Pitt had built the “strongest enforcement records of any SEC in history.”

“The president wants to find somebody” who “will continue Harvey Pitt’s very successful record of taking action against corporate corruption,” Fleischer said.

For the last several weeks, Pitt attracted criticism from Republicans and Democrats, including Sen. John McCain (R-Ariz.), Sen. Paul Sarbanes (D-Md.), and Senate Majority Leader Tom Daschle (D-S.D.), who accused Pitt of being too soft on the accounting industry.

The SEC released Pitt’s resignation letter shortly before 9 p.m. EST Tuesday, just as many of the polls were closing on Election Day. Some Democrats questioned the timing of the SEC announcement.

“I’m not surprised that he resigned. I am a little surprised that he chose tonight to do it,” Daschle said on CBS. “I think I know why. I think they wanted to minimize the news. They were hoping you’d be so consumed by the election, that you wouldn’t want to be talking about Harvey Pitt tonight.”

Sen. Trent Lott (R-Miss.), who is set to become the Senate’s majority leader in January, praised Pitt’s decision.

“In the end, he [Pitt] did the right thing… You have to have someone in that position that people have confidence in,” Lott said.

The Senate last year unanimously confirmed Pitt to head the SEC shortly after Mr. Bush nominated the former corporate securities lawyer in Aug. 2001.

Prior to chairing the SEC, Pitt worked as a corporate lawyer representing each of the Big Five accounting firms and their professional association, the American Institute of Certified Public Accountants, in the 1990s.