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Wednesday, 6 November, 2002, 21:34 GMT
Hunt begins for SEC chief
Outgoing US Securities and Exchange Chairman Harvey Pitt
Harvey Pitt was haunted by numerous political missteps


With Tuesday's dramatic resignation of Securities and Exchange Commission Chairman Harvey Pitt, the search begins for his successor.

US President George W Bush
Mr Bush must now find a new SEC chairman
Analysts expect the Bush administration to move quickly in appointing a new SEC chief, perhaps installing an interim chairman while Congress deliberates over a permanent replacement.

Speculation swirled on Wednesday over whom the Bush administration may nominate to replace Mr Pitt.

"The administration has the opportunity to nominate a new chairman quickly given the warm glow of its Election Day victory," says Jonathan Low, senior fellow at Cap Gemini Ernst & Young.

"The question for the administration is can they rise above their penchant for partisan or ideological appointees and find a statesman to really restore confidence in the markets," he told BBC News Online.

There is concern that a partisan battle may ensue if the administration pursues the same path it has with its judicial appointments.

Funding mandate

Last Thursday Mr Pitt came under fire for his failure to disclose to fellow SEC board members sensitive information about the man chosen to head the new Public Company Accounting Oversight Board - William Webster.


When things are bad it's a terrific time for someone who is reform minded to come in and make a difference

Dan Weinfurter, CEO

Mr Pitt's resignation combined with retaking of Congress by the Republican party during mid-term elections has some regulatory experts pondering how President George W Bush might pursue corporate reform.

"There is nothing that will knock the reform train off the tracks, [although] it might be slowed down a little bit," says Paul Maco, a corporate governance attorney who served under former SEC chief Arthur Levitt.

"There are still imposed deadlines that must be met," he says, adding the SEC is perfectly capable of meeting those deadlines.

Some analysts believe Mr Bush, a Republican, is not particularly concerned with corporate governance, citing his attempt a few weeks to cut funding of SEC.

The investor-watchdog agency has yet to receive its full appropriation identified in last summer's Sarbanes-Oxley Act.

Seeking clarification

With the resignation some changes are expected, says Dan Weinfurter, chief executive at Parson Consulting.

Former CIA and FBI chief William Webster
Whether William Webster will stay on is up in the air

"At a minimum the same trends will continue, but I think that's unlikely," he told BBC News Online.

"It's far more likely there will be new steps taken to prevent some of the unintentional biases that have entered into the accounting profession," Mr Weinfurter says.

It could go as far as restricting auditors to audit work - something he thinks is unlikely.

In addition here has been some speculation the new Republican-controlled Congress may seek to rollback some provisions of the Sarbanes bill passed in July.

The legislation established an accounting oversight board within the SEC along with other major reforms.

While the bill is not likely to see revisions, there are parts of the in hastily crafted act that would benefit from clarity and some conformity, analysts say.

Pitt Lite?

Whoever takes on the chair will have to rally the troops and be capable of quickly restoring enthusiasm among staff and confidence in the marketplace as well.

Mr Pitt was criticised for heightening concern about the fairness and the credibility of the markets rather than reducing it. In addition, morale at the SEC has sunk in the shadow of his leadership.

Nevertheless, it is likely that Pitt's successor will not be too dissimilar from him, says Parson's Weinfurter.

"When things are bad it's a terrific time for someone who is reform minded to come in and make a difference... in what is now a very difficult situation."


Politics of regulation

Worldcom goes bust

Enron fall-out

Andersen laid low

FORUM
See also:

06 Nov 02 | Business
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