SEC Chairman Freed From Recusal Pledge
Securities and Exchange Commission Chairman Harvey L. Pitt’s one-year pledge to sit out votes on cases involving former clients has expired, leaving him free to act on all issues before the agency.
The former securities lawyer, who was sworn in as SEC chairman a year ago last Saturday, said he will decide whether to participate in agency actions case by case. Those judgments may include whether to vote on possible civil charges against bankrupt energy trader Enron Corp. and its auditor Arthur Andersen, a past Pitt client.
The decision means Pitt will be free to pass judgment on some of the nation’s biggest financial companies. His list of 112 former clients, as a lawyer in private practice, included Andersen and the other four biggest accounting firms; Merrill Lynch & Co., the largest brokerage; the New York Stock Exchange; and the Securities Industry Assn., the trade group for brokerages.
SEC spokeswoman Christi Harlan said Pitt will rely on his own judgment and SEC ethics rules that bar commissioners from taking actions that would benefit them financially. She said Pitt won’t make public any additional guidelines for his decisions.
“That’s pretty much it,” Harlan said. “He’ll handle it on a case-by-case basis.”
Rep. Edward J. Markey (D-Mass.) has urged Pitt to extend his recusal agreement, a position shared by some experts in the field of government ethics.
“It would have been a sensible move on Pitt’s part to have extended the recusal agreement,” said Stuart C. Gilman, a former official at the U.S. Office of Government Ethics who is now president of the Ethics Resource Center, a nonprofit group that advises businesses. “He should insulate himself from any perception of a conflict of interest. Sometimes that insensitivity is what gets people into a lot of trouble.”
Pitt has said he will not return to private law practice when he leaves the SEC, closing off a possible ethics concern about whether his actions might be influenced by a desire to please future clients or prospective employers.
