“People have to know that if they violate the law, they will have to be punished,” the former SEC chairman declared last month at a conference in Boston sponsored by research firm Financial Insights. Since rejoining the private sector early this year, the 58-year-old lawyer-turned-corporate-governance-consultant has been speaking out on everything from the Sarbanes-Oxley Act (“We got a hastily and badly drafted statute, but it’s the law”) to the recent woes of the New York Stock Exchange (“The government is a poor substitute for self-regulation in establishing ethical standards”). He’s critical of the securities enforcement efforts of state officials like New York State Attorney General Eliot Spitzer, though he praises the “thorough investigation” that led to Spitzer’s recent crackdown on mutual fund trading practices. “The states do have a role to play,” Pitt tells Institutional Investor, “but it has to be coordinated and organized. Fifty states doing whatever they want with no coordination can seriously undermine the system.”
Pitt says he’s not trying to push any policy agenda. “I just believe that in this new environment, companies that implement good governance policies and procedures will thrive, and the marketplace will reward them,” he says. “My aim is to help people reach that result.”
In May, Pitt formed consulting firm Kalorama Partners with Robert Herdman, the SEC exchief accountant who shared the blame with him for appointing former CIA and FBI director William Webster as chairman of the Public Company Accounting Oversight Board. Despite the fact that Webster had chaired the audit committee of U.S. Technologies, a company whose accounting practices were under SEC investigation, Pitt remains convinced that “Webster would have made a terrific chairman. But what might have been is irrelevant. Bill McDonough will be a terrific chairman.” Former New York Fed president McDonough took the helm at the accounting board in June. As for Pitt’s successor at the SEC: “I have the utmost respect and admiration for Bill Donaldson, and I’m very supportive of what he’s trying to do.”
