Well-timed resignation, Mr. Pitt. Dubya and his minions thank you for timing it just right. :rolleyes:
Just when it’d get buried on page A-42.
Of course the question is: what does it mean? We’ll never find out, really. Implication of anything dire or too important about it is probably jumping the gun, but with the timing it will just float by unnoticed.
Linkity link?
Who’s Harvey Pitt and from what did he resign?
Dubya will probably nominate Ken Lay to replace him. And, if the Republicans retake the Senate, he’ll probably be confirmed!
[for friedo - Harvey Pitt, Chairman of the S.E.C. - check out any news website, MSNBC, CNN, NY Times, whatever. You need to get out more.]
OK, thanks Early Out - I’m usually fairly well versed in US politics but I had no clue as to who this dude is. Don’t see anything about him on the news sites right now though (all covering election stuff.) Time for some googlin.
Here’s a link: http://www.msnbc.com/news/831168.asp
LOL! Funny, but I think he’ll go another direction on that one 
He has made the fight against corporate corruption at least a talking point, even if you suspect he won’t actually do anything about it (not that I know what he’d do), so appointments will have to live up to that.
Yeah, something about Pitt’s timing really stinks. I don’t think Pitt intended to even consider hanging on after the election, but I have to wonder about why he resigned after most everyone had already voted. Either Pitt was plumping for the Republicans because he likes them, or Pitt was plumping for the Republicans because he knew that Republican control of Congress would help save his ass later on, or Pitt was offered some kind of sweetheart deal from the Bush campaign.
Whatever it is, it stinks to high heaven. More sleaze to pile up around the grimy Bush administration.
Pitt was a guy who just didn’t get it. He never could separate his prior zealous advocacy for the accounting industry (many of whom probably were his personal friends at this point, I imagine) from his duties to investors as SEC commissioner. He made so many missteps, many of them repeatedly (close door meetings with accounting execs behind the backs of his fellow SEC people) that the fact he is gone is not as surprising as how long he lasted. Nice weasly move on the timing.
Bye Harvey, don’t let the door hit you in the ass on the way out.
Paging Mr. Webster
Call for Mr. Webster on line two…
Oh, please. A high-profile resignation that tarred the big victories of last night, costing the Republicans fully half the top-front page of this morning’s New York Times is somehow a Republican Plot? Yeah. Spread it on a garden – maybe something will grow, but other than that it’s shit. From a political perspective, it would have been better for him to resign sometime between the election and the new Congress, so Bush could take some credit for “cleaning up his own house.”
Lemme tell you a little about Harvey Pitt. I’ve known him professionally for a decade. You won’t find a guy with higher integrity. Did he work hard for his clients? You bet he did.
I thought he’d make a fine SEC chair. Turns out he’s politically tone-deaf during a time when politics has entered the SEC like never before. That surprised me, as most people thought he was at least a little politically adept. But he couldn’t transfer his behind-the-scenes “Mr. Fixit” skills to the public forum.
As for the resignation, he’s always said he works for the White House and no one else (FTR, that was also a political mistake and different from the public face most other SEC chairs have adopted). The White House has been increasingly, uh, tepid in its public support of him over the past few days, since he struck out on Webster. I figger someone called him and told him it was time for him to go, and he didn’t waste any time.
Unlike Manny, I don’t have any personal experience of Harvey Pitt. I am, however, a former securities lawyer* and I can attest that many of the problems we are now seeing in the market wouldn’t have happened but for mismanagement under his near-sainted predecessor, Arthur Leavitt.
Remember, Pitt’s only served as SEC head for 15 months. Most of the conduct that’s been found fraudulent in Enron, WorldCom and the like had gone undetected for years. Under Leavitt, the Corporate Finance division - the front line in making sure that frauds get detected early on - dropped the ball. Sure, it suffered from funding shortfalls. But Leavitt misdirected enforcement priorities. For instance: CorpFin staffers were evaluated based more on the number of reviews they performed rather than their depth or quality. Why bother reading 800 pages of an Enron debt offering, which will take you a fortnight just to understand their business, when for the same effort you can rake twelve penny-ante business over the coals? Especially since Enron will have blue chip lawyers and Big Five accountants, and you know those guys don’t usually fuck up.
Ooops.
Except, of course, that it was pretty widely known that companies like Enron were doing some really interesting, innovative, cutting-edge stuff - exactly the sort of things the SEC should be watching over.
And the SEC wasted huge amounts of time on initiatives that never had the foggiest chance of making a difference. “Plain English” was one - I just loved getting comments about how to make documents easy to understand for investors who I know would never, ever read them. (I know: I wrote the goddamn things and do I read the prospectuses for my IRA? Nope.) It’s focusing on process rather than substance. Ludicrous.
Even better: the long-rumored Aircraft Carrier, a complete rethink of securities disclosure. Never saw the light of day, but (sources in the SEC reported widely) consumed significant staff resources.
Lots of fiddling while Rome burned.
I will agree that Harvey Pitt proved politically inept. But that’s all. There’s zero evidence that there’s a corrupt bone in his body - and even if there were, it’s irrelevant to what he’s being blamed for.
*After practicing law for longer than I’d ever planned to, I was laid off and am now a legal writer and editor.
But wasn’t Leavitt the one who tried to get some rules in place to reign in the conflict of interest problems inherent in letting accounting firms offer consulting services to their clients, but couldn’t weather the political storm whipped up by the Big Five? It sounds like, in that respect at least, he was trying to do the right thing, something that might well have headed off some of the subsequent corporate implosions.
Correct, he did. Two problems: first, although conflicts of interest were a possible contributory problem in the Enron meltdown, the SEC hasn’t produced much evidence to show that it was central; and second, it’s pretty much irrelevant to WorldCom, Tyco, Global Crossing, Adelphi, et al.
I agree with Leavitt that auditors (and, I’d say, attorneys) have no business providing two lines of advice to the same advice. But you don’t focus on that issue - or the others I’ve named - to the detriment of your every-day, run-of-the-mill document reviews. But it seems that’s what the Commission did.
ooo-eee. That should read, “two lines of advice to the same client.”
I agree with the assessment that Pitt was a political stiff and that the timing of his resignation is pretty meaningless–the SEC is supposed to be an independent body (subject to the inherent limits in any political sinecure of course), and as such Pitt should have been working for investors generally, not just the White House, the Big 4, the bankers and the issuers. (Improving things for investors will redound to the benefit of the industry too so it’s not even an adversarial stance to take.)
I agree with Oxy that review of compliance with the disclosure rules is the SEC’s bread and butter task. However, in my opinion the conflict of interest problem is still important and still needs to be addressed. The type of laxness about professional integrity that led to Enron, Worldcom and Andersen’s implosion resulted from a culture or attitude of arrogance and intimidation.
“We have a proprietary way to run your finance dept. which we would never expect you to be able to come up with because you’re not up to date on the latest in structured hybrid equity convertible tranche instruments vetted by our very expensive pet lawyers and, by the way, if you hire us you’ll learn our secrets and get rich and sleek like us and of course analyst coverage will improve (as will your stock price) if you use modern financing techniques instead of vanilla bank loans and, by the way, your biggest competitor is issuing LOC-enhanced spiders this week.” That sentence is a mix of threats and promises and tries to sell investment banking, accounting, management, consulting, legal and analyst services. The best way to find someone to call bullshit when faced with something like this is to have independent agents reviewing/providing each aspect of the deal.
I know the problem of analyst independence is tough to address given the current cost/compensation structure of banking firms, but I think it should be fixed anyway.
Beautifully worded, Humble Servant.
But you forgot, “and we’re spinning off a few tasty IPOs this week that I just know you’ll want to hear more about, and we can save that conversation about a possible merger consultation until lunch…”
Make that lunch at Elaine’s, please (and thanks).
Here’s what puzzles me about the “hot IPO” phenomenon. If I was taking my company public (whether I was selling some of my own shares or not), I would raise hell if the underwriters mispriced the deal so badly (i.e., too cheaply) that most of the value ended up in the pockets of the bankers’ favored clients. Predicting market demand is not a science, of course, but there was a period when hot IPOs had whisper numbers that were pretty much a guarantee of fast profits for the initial buyers. Underwriters who failed to meet minimum industry standards in pricing shares and whose other clients benefitted from the low prices should have been sued by the issuers under the underwriting agreements for failure to perform and conflicts of interest. Did this not happen just because they issuers were afraid to roil the market for their own shares?