Monitor Breakfast

Selected quotations from a Monitor breakfast with Harvey Pitt, chairman of the Securities and Exchange Commission.

Excerpts from remarks by Harvey Pitt, chairman of the Securities and Exchange Commission:

On whether current market abuses differ in scope from those of the past:

"The effect of abuses is much more dramatic today than it has been at any time in our past. It is impossible for anyone to say whether or not there is more abuse or not. But this kind of environment and with current technology, there has to be incredibly less tolerance for abuses.

On reasons why tolerance for abuse is less today:

"The first is technology. You know, there were abuses 20 years ago, [but] it took people longer to find out about it.

"Second ...when something happens to one prominent company in an industry, it can have a dramatic impact on other companies in the same industry, and that fact will be felt instantaneously."

On whether accurate accounting would reveal weaknesses the stock market could not handle:

"I think the industry can handle it. [Regardless], we can't accept a system in which investors are not told what they are really getting. That is the fundamental thrust of the securities laws. ...Good business is consistent with extensive protection of investors."

On reluctance to reform in the accounting industry:

"The accounting profession may well have been its own worst enemy. There is a need for reform, and I think there is – even more importantly – a need to be seen to embrace reform.

I think the failure to have done that [has resulted in some] of the lack of confidence we see."

"We made up our minds some time ago that we were not going to wait for the profession to embrace reform. Reform is coming and is coming quickly, and we are going to make sure it happens."

On a rule being considered to make stock analysts' reports more trustworthy:

"[It] would require analysts to disclose ... [whether their] reports truly reflect [their] views ... [and certify] that no compensation was given" to influence any resulting recommendations.

On his response to accounting industry pressure to weaken new regulations:

"The SEC has an obligation to ensure that it adopts the strongest, most vigorous regulatory system for accountants possible. And I am unwilling to let anyone pressure me out of that. I am unwilling to do anything but consider issues on the merits. We will make ourselves accessible to investor groups, to members of Congress who often have incredibly useful observations. But the meaning of an independent agency is that only the agency can make the ultimate decision. That is why I think I was put in this job, and it is how I intend to perform it."

On why he likes the SEC job despite criticism:

"This is a time in which public confidence in the markets is critical.

"Government service as a general proposition is phenomenal. It is a great opportunity, but at this time and juncture it is much more than that. I would describe it as an historic opportunity.

"We are in the process of making more changes in the way our capital markets function and the rules that the SEC administers than I think at any point in our history. That is an opportunity – if you are interested in solving problems and making the system better – that is irresistible.

"And nothing that has happened has any impact on my enthusiasm and my delight at being a part of the process that will solve these problems, as opposed to being a part of the process that raises questions. I want to solve the problems.

"I think I am uniquely qualified to do that. I think we have done more in my first nine months as chairman than in any nine-month period in the SEC's history, and I think there is a great deal more to come."

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