- The Washington Times - Saturday, November 9, 2002

BOCA RATON, Fla. (Bloomberg) Departing Securities and Exchange Commission Chairman Harvey Pitt said yesterday that a “climate of attack and partisanship” is undercutting SEC work.

“In a partisan environment, criticism often devolves into attack,” Mr. Pitt said in a speech to the Securities Industry Association's annual meeting here. “It's not just unproductive. It's counterproductive.”

Mr. Pitt resigned Tuesday after a barrage of criticism over his handling of former FBI Director William Webster's appointment to head a new accounting board created by Congress.

In further fallout over the Webster matter, Mr. Pitt yesterday accepted the resignation of the SEC's chief accountant, Robert K. Herdman, who played a role in bungling the appointment to the board charged with overseeing the audit industry.

Mr. Pitt had asked Mr. Herdman to look into questions raised about Mr. Webster's knowledge of accounting problems at U.S. Technologies Inc. while he chaired the company's audit committee. Mr. Herdman advised the chairman that the questions about Mr. Webster did not pose an obstacle to his appointment.

Mr. Pitt decided not to inform the White House or other SEC commissioners about the matter before they voted to make Mr. Webster head of the board in what proved to be a fatal error that led to the Pitt resignation.

“Mister Pitt needs to accept some responsibility for his own demise,” said Billy C. Bowden, a managing partner at Crown Capital LLP. “He would have been unassailable had he not made a series of poor choices.”

In concluding his address today, Mr. Pitt recited a quote from former President Theodore Roosevelt, which also was used by President Richard Nixon in his speech resigning the presidency on Aug. 8, 1974.

“It is not the critic who counts,” he said, quoting Mr. Roosevelt. “Credit belongs to the man who is actually in the arena; whose face is marred by dust, sweat and blood.”

More than 300 brokers at the SIA meeting greeted Mr. Pitt's speech with a 20-second standing ovation.

President Bush said he will soon name a new SEC chairman who will hold “wrongdoers to account” and restore confidence in financial markets shaken by accounting scandals at Enron Corp., WorldCom Inc. and other companies.

Mr. Pitt won unanimous Senate confirmation last year before coming under criticism for his past ties to the accounting industry and a series of missteps.

His failure to alert fellow SEC commissioners about questions of accounting fraud at U.S. Technologies Inc. before a close, bitter vote over Mr. Webster is under investigation by the SEC's inspector general and the General Accounting Office.

“Unfortunately, turmoil surrounding my chairmanship makes it very difficult for the commissioners and staff to perform critical assignments,” Mr. Pitt said. “I hope my successor isn't greeted with the same climate of attack and partisanship.”

The chairman listed his accomplishments during his 15 months as chairman. He said he was proud of helping to reopen stock markets after the September 11 terror attacks and enacting new rules that force executives to certify the accuracy of their financial statements.

Mr. Pitt urged the securities industry to take the lead in dispelling the widespread belief among small investors that brokers are greedy and self-interested.

“You need to be committed to giving customers what they most want honesty, integrity and genuine concern for their welfare,” he said.

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