Pitt (SEC) vs. Levitt (ex SEC, now Carlyle Group)

["Charles Jannuzi" <jannuzi@xxxxxxxxxxxxxxxxxxxxxxxxx>]

And here we have Levitt (the guy at Carlyle Group, former head of SEC)
attacking Pitt (now in charge of the SEC).

How many in the OECD are now thinking the US's approach to financial
oversight and regulation is about as rickety as its homeland security?

If Pitt and the SEC blow it, the services liberalization agenda of the US, a
key component of its strategic trade plan, is in big trouble.

CJ

http://money.cnn.com/2002/02/01/companies/davos_pitt/

Pitt outraged by Enron

February 1, 2002: 4:13 p.m. ET

SEC chairman says he's dedicated to overhauling accounting system.  By Staff
Writer Mark Gongloff NEW YORK (CNN/Money) - Harvey Pitt, Chairman of the
U.S. Securities & Exchange Commission, said Friday he is "outraged" by the
unfolding Enron Corp. scandal and refuted accusations that his plan to
reform oversight of the accounting industry doesn't have enough "teeth."

Earlier Friday, Pitt, who was attending the World Economic Forum's annual
meeting in New York, had completed a workshop called "Responding to
financial market volatility." In that conference, panelists decided that the
best remedy for market volatility was transparency, both for money managers
and companies.

"My belief is that our system is basically being implemented by companies
that are honest and have integrity," Pitt said. "I do think, however, that
there are problems in our system. The more I learn about Enron, the more
outraged I become."

He could not comment on the investigation of Enron and its auditing firm,
Arthur Andersen. The SEC and Congress are looking into financial
irregularities by both firms that led to the energy trader's bankruptcy and
to the loss of billions of dollars in stock value.

The best way to avoid such situations in the future, Pitt said, is to insure
that companies provide better, more current information, increased corporate
governance and that accounting principles be improved.

"The system needs repair. The failure to repair it meant that our chances of
preventing Enron were reduced dramatically," Pitt said.

Pitt recently announced a plan to reform the way accounting firms are
regulated, including an overhaul of the peer review system. His predecessor,
Arthur Levitt, has criticized Pitt's proposal, saying it lacks "teeth," in
part because it still includes peer review.

"I welcome any constructive criticism," Pitt said. "I think [Levitt's]
criticism ... doesn't have any bearing or relationship to what we actually
were proposing."

"We are proposing something that would have powers of compulsion, powers of
enforcement, complete independence from the accounting profession," Pitt
added. "My predecessor presided over a system in which there was no
independent discipline involved."

He also responded to a recent critical article in the Wall Street Journal,
saying someone had gone out of their way to mislead the paper.

The Journal last week reported that an SEC investigation into the accounting
industry peer review process had "petered out" after Pitt became chairman.
Pitt pointed out that, soon after he became in chair, in August 2001, he was
forced to respond to the Sept. 11 attacks. In any event, he also has made an
overhaul of the peer review process one of his top priorities, he said.

"I have been critical of the peer review system before Enron," he said. "I'm
on the record and will remain on the record."

"I want to reaffirm that the investing public is entitled to the best system
we can produce," Pitt added. "While our system is better than any other, it
has dramatic flaws. We will not allow the SEC to abdicate its responsibility
to solve these problems."

Pitt also responded to a Jan. 27 article in the New York Times that
questioned the SEC's asking the National Association of Securities Dealers
to drop a lawsuit against the Island ECN electronic trading system.
According to the report, the NASD planned to sue Island for withholding the
best price for its most heavily traded stock, the Nasdaq tracking stock,
which trades under the symbol QQQ, a violation of SEC rules.

"There is a growing sense of unease among investors that the S.E.C., under
its new chairman, Harvey L. Pitt, may not be the investor protector that the
Enron era requires," the article said. "The view appears to be justified."

Pitt said the Times reporter, Gretchen Morgenson, had the facts wrong in the
story and that the first he learned of the issue was when he read her
article. He said the NASD was uncertain about whether or not Island was
violating rules and had asked the SEC for protection if it didn't do
anything about it. In the end, the issue never came before the SEC, Pitt
said.

"It's an example, in my view, of somebody not checking out the relevant
facts before they print a story," Pitt said.