Editorial: SEC chairman, quite frankly, is the pits

Friday, Nov. 1, 2002 | 9:31 a.m.

Harvey Pitt should have resigned months ago as the chairman of the Securities and Exchange Commission. In this past year -- as business scandals involving accounting abuses have been revealed -- Pitt has undermined investor confidence because he doesn't believe in aggressively regulating the accounting industry. Shortly after he became SEC chairman, Pitt said his stewardship would be "kinder and gentler," a foreboding statement if there ever was one. Most recently Pitt worked hard to get fellow commissioners to join him in installing William Webster, the former head of the FBI and CIA, as the head of a new board that is supposed to have strict oversight of the accounting industry. Webster was the darling of the White House and the accounting industry -- a sure warning sign that he shouldn't have been picked. It was a shame that the SEC passed over a better qualified candidate -- John Biggs, the head of a pension group -- for the job Webster eventually took.

In yet another fiasco it was disclosed this week that Pitt failed to tell other SEC commissioners -- before they voted on Webster -- that Webster previously headed the auditing committee of a company that was facing fraud accusations. To withhold such vital information is unconscionable. Pitt's continuing presence at the SEC is a terrible signal to send to investors who want transparency in a corporation's books. It also sends the wrong signal to the accounting industry about just how deep the federal government's commitment will be in providing tougher oversight. Pitt is trying to buy himself some time by calling for an inspector general investigation of Webster's appointment. But that's not enough. As we said in a July editorial, Pitt should resign. For that matter, Webster should step aside as well. The SEC needs a fresh start, one not tainted by Pitt's reign.