Bush Settles on SEC Chief

W A S H I N G T O N,  May 8, 2001 -- President Bush intends to nominate securitieslawyer Harvey L. Pitt, a general counsel of the Securities andExchange Commission in the 1970s, as chairman of the watchdogagency, an administration official said today.

There was no immediate indication of when the White House wouldannounce the nomination.

The official spoke on condition of anonymity.

Pitt's clients in his law practice have included major brokeragefirms and the New York Stock Exchange, which he would regulate asSEC chairman. He also represented inside trader Ivan Boesky duringthe Wall Street scandals of the late 1980s and early 1990s.

If he is confirmed by the Senate, Pitt would assume the job at atime of stock market turbulence and disappointment for manyinvestors who had become accustomed to steady gains during thelong-running bull market that ended last year.

Name in Circulation for Weeks

No lawmakers have raised objections to Pitt's anticipatednomination, which must be approved by the Senate Banking Committeebefore being voted on by the full Senate.

Marc Lackritz, president of the Securities Industry Association,Wall Street's biggest trade group, said of Pitt: "He has theexpertise and the experience, and that's going to be invaluable tothe SEC in its role helping investors."

Marc Beauchamp, executive director of the North AmericanSecurities Administrators Association, praised Pitt's "brilliantlegal mind" and said he "can clearly hit the ground running."

Pitt, 56, is a partner in Fried, Frank, Harris, Shriver &Jacobson in Washington. His name had been circulating for weeks asa leading candidate for the SEC position, after several Wall Streetand corporate executives turned down the White House's offer of thejob.

Pitt also would have to grapple with complex market issuesarising from technological changes and the rival electronic marketsthat have challenged the dominance of the NYSE and Nasdaq in recentyears.

Levitt Left Job in February

He would succeed Clinton appointee Arthur Levitt, thelongest-serving SEC chairman, who was a champion of smallinvestors. Levitt left the job in February, and Bush named LauraUnger, the only Republican SEC commissioner, as acting chairwoman.

SEC officials have declined to discuss Pitt's possiblenomination publicly, but several privately were delighted at theprospect of someone who had come from their ranks taking the helm.

In past years, SEC chairmen often have come to the agency fromthe securities industry and frequently have been major fund-raisersfor the party in the White House. Levitt, for example, had headedthe American Stock Exchange and was a leading Clinton-Gorefund-raiser before being appointed by President Clinton in July1993.

Pitt was general counsel at the SEC from 1975 to 1978. He alsohas been chief counsel of the agency's market regulation division.

In private law practice, Pitt represented the New York StockExchange in the SEC's case accusing the exchange of failing toenforce laws barring its floor brokers from making trades thatprofited them personally. In a June 1999 settlement with theregulators, in which the exchange neither admitted nor deniedwrongdoing, the exchange agreed to improve oversight of the brokersyet wasn't subject to any administrative censure or fines.

More recently, Pitt represented Michael Saylor, the founder andchief executive of once high-flying software company MicroStrategyInc., after the SEC alleged accounting fraud. Saylor neitheradmitted nor denied wrongdoing in his settlement. He agreed to pay$8.28 million in restitution and a civil fine of $350,000, and torefrain from future violations of federal securities laws.

During the insider-trading scandals, Pitt represented Boesky,whose admissions to the SEC rocked Wall Street and helped toppleDrexel Burnham Lambert Inc. and its junk-bond financier, MichaelMilken, who pleaded guilty to fraudulent transactions involvingBoesky.

Boesky himself pleaded guilty to one count of lying toregulators and spent two years in prison.