Securities and Exchange Commission Chairman Harvey Pitt is developing an increasingly tough regulatory agenda as fallout from Enron Corp's bankruptcy mounts, many investors and former regulators say.
Pitt, who yesterday said the SEC would investigate conflicts of interest by Wall Street stock analysts, responded to the energy giant's collapse by proposing rules aimed at accounting fraud and corporate conflicts of interest. The SEC also more than doubled its inquiries into accounting irregularities at companies.
Those actions, taken amid criminal investigations and Congressional calls for reform, are different from the vision of a "kinder and gentler" SEC Pitt articulated after taking office in August, many investors say.
"To look at Pitt in 2001 was probably to assume he was not going to be a reformer," said Peter Clapman, chief counsel for corporate governance at TIAA-CREF, the biggest teachers pension fund in the US. "Enron forced an agenda of corporate responsibility on the chairman." Some say Pitt, who spent two decades as a private lawyer for accounting and securities firms, still hasn't gone far enough.
They cite, for example, his opposition to banning accounting firms from earning consulting fees from companies they audit.
"He is not the kind of chairman of the SEC that recognizes the critical import of the SEC's responsibility to society for the highest standards of corporate governance," said Abraham Briloff, emeritus professor of accounting at Baruch College in Manhattan who has testified before Congress on accounting issues. "His proposals have been reactive, instead of proactive." Pitt has proposed creating a new oversight body for accountants, requiring shareholder approval for executive stock options.
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