Harvey Pitt, former SEC chair, 1945-2023

Few people were as devoted to the US Securities and Exchange Commission as Harvey Pitt. The watchdog’s youngest ever general counsel, he later became its chair, leading its response to the 2001 terrorist attacks and a series of corporate scandals, including the collapse of Enron.

But Pitt, who has died aged 78, also attracted an extraordinary level of criticism to the watchdog during his chairmanship from people who claimed that he was tone-deaf — and too close to the industries he regulated. He ended up resigning after barely 18 months.

Remaining a potent influence on financial regulation until his death, he testified regularly before Congress and worked as a consultant. He was commissioned by the SEC to head an important investigation that helped lead to a 2021 overhaul of the main American accounting regulator.

“Harvey loved this agency,” SEC chair Gary Gensler and the other four present commissioners said in a statement mourning Pitt’s death. “Even in the last year, he has made himself available to offer advice and continued to submit comment letters on our rulemaking proposals.”

Born in Brooklyn in 1945 to immigrant parents, Pitt was the first in his family to attend college. While at law school at St John’s University, his performance in a moot court competition so impressed SEC staff members involved in the judging process that they suggested he came to work with them after graduation.

There he rose rapidly through the ranks, advising the chair, arguing for the agency in court and helping to establish its power to sanction the professionals who appeared before it. Though he had initially signed on for just three years, he stayed a decade before leaving for private practice. “I was completely hooked,” he remembered in a 2007 interview. “I guess you could say I was addicted [to] the SEC. I just thought it was a great place; the people I met were great; the issues were fascinating.”

In two decades at the Fried Frank law firm, he became a go-to lawyer for the securities industry. He defended Merrill Lynch and the notorious insider trader Ivan Boesky among others, and helped fend off rules that would have prohibited accounting firms from offering consulting services to their audit clients. Pitt could be funny and charming, but he also displayed a bullheaded self-confidence that won him the description “seldom wrong, never in doubt”.

When George W Bush, then president, tapped him to become SEC chair in the summer of 2001, Pitt described it as “really a dream come true”. But his wife, Saree Ruffin Pitt, feared he lacked the delicate political touch that such a visible post required and reportedly warned him not to take it.

Just days into his tenure as SEC chair, terrorists attacked the World Trade Center, killing thousands, knocking the American markets offline for nearly a week and destroying the SEC’s New York regional office. Pitt won praise for emerging as a “voice of calm” as the exchanges struggled to reopen.

But an October 2001 speech to the accounting industry went down badly when Pitt promised “a new era of respect and co-operation” and pledged to make the SEC “a kinder and gentler place” for everyone. The tone set off alarm bells among Democrats and investor groups, who feared that Pitt’s extensive client roster would make him soft on the industry.

The dotcom crash followed by a string of huge corporate collapses stoked further investor anger at Pitt’s co-operative approach and left the SEC vulnerable when the energetic New York attorney-general Eliot Spitzer decided to make a name for himself by investigating conflicts of interest in Wall Street research notes. It was an issue that Pitt was well aware of and had urged the big banks and brokers to address. But Spitzer grabbed headlines by releasing Merrill Lynch emails that showed research analysts privately disparaging the stocks they were telling the public to buy.

Pitt worked with Spitzer to win a $1.4bn settlement with 10 big banks over biased research, and his supporters point to his thoughtful response to the egregious frauds at Enron and WorldCom. He forced public company chief executives to personally attest to the accuracy of their financial reports. That caused many companies to clean up their books and many more to improve their controls. The requirement later became part of the 2002 Sarbanes Oxley corporate reform law and is credited with improving American corporate accounting.

But his tenure was dogged by repeated mis-steps: he proposed increasing his own salary as part of the post Enron reforms and met privately with Goldman Sachs officials when the bank was under investigation. The last straw came when he failed to tell fellow SEC commissioners that his pick to head the new Public Company Accounting Oversight Board had run the audit committee of a company accused of fraud.

Initially bitter about what he saw as a partisan hit job “based on so much nothing”, Pitt flourished as an elder statesman. He was the first president of the SEC Historical Society, headed a small but thriving Washington consultancy and had recently advocated a new regulatory regime for cryptocurrencies.

“Harvey Pitt was one of the greatest securities lawyers of his generation and a great friend to the mutual fund industry,” remembered Paul Schott Stevens, former chief executive of the Investment Company Institute. “But in the modern SEC it’s not enough to be a great lawyer, you have to be a very adept politician too.”