Interview with Harvey Pitt

Just a month before 9/11, President George W. Bush named Harvey Pitt as the 26th Chairman of the U.S. Securities and Exchange Commission. Serving from 2001 through 2003, Pitt guided the agency amidst the 9/11 tragedy (including the destruction of the SEC’s own New York office), through the WorldCom and Enron controversies, as well as through the implementation of the Sarbanes Oxley Act of 2002. 

Pitt first joined the SEC right after graduating from St. John’s University School of Law in 1968. (Previously, he’d attended New York’s famed Stuyvesant High School and Brooklyn College.) After serving on staff for several years, Pitt was named the Commission’s youngest-ever general counsel. Later, he joined the Fried Frank law firm, eventually serving as the firm’s co-chair. 

Throughout Pitt’s years of practice, he taught law at various institutions, including George Washington University Law School and Yale Law School. Today, he regularly appears on CNBC, Bloomberg, and FOX Business as a television commentator explaining financial matters. After leaving the SEC in 2003, he founded the strategic consulting firm Kalorama Partners, and its affiliated law firm, Kalorama Legal Services, where he currently serves as chief executive officer. 

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Harvey Pitt’s “Insights from Legal Luminaries” remarks presented at the 2014 Midwinter Leadership Meeting of Officers, Council and Committee Chairs in Tucson, Arizona, on January 18, 2014, can be viewed by clicking here. 

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What inspired you to attend law school and to practice law? 

It was actually a very last-minute decision. I originally had thoughts of focusing on either the mathematics or actuarial fields. The first hint I had that I probably should find a different career path was after my first semester’s experience with college-level calculus. Fortunately, political science and urbanism were interests I had too. By the time I was ready to graduate, those interests had become more full-blown. I had a real interest in legal aspects of political science and law school seemed like a natural fit. 

Why did you pick the SEC? What about it interested you as a new lawyer? 

In law school, I intended to become a labor lawyer. Labor law seemed to me to be a very exciting field. In those days, there really were not very many, if any, securities law courses. Schools offered corporations and advanced corporations courses. But securities laws hadn’t yet become a separate course offering. So, the last thing on my mind was securities law. 

But in my national moot court competition, the issue posed was a hypothetical based on an actual case, Fisher v. Kletz, which raised substantive and procedural questions about the application of securities laws. I was fascinated and, along the way, a number of SEC officials and staff personnel who were judging various rounds suggested that I give consideration to working at the SEC, which I did. 

The SEC’s hiring process those days involved taking an exam, which I think many law school graduating seniors frowned upon, but I actually found quite interesting. I received offers from all the divisions, and the general counsel’s office seemed to me to be the right place. The SEC seemed an exciting place to work. It has a very clear and interesting mission, and it was involved with very complex financial issues. I went with my instinct, which I always think is anyone’s best resource. 

It’s amazing that if you’d been given a different issue in your moot court competition, you might have had a totally different career, right? 

That’s absolutely correct. I’ve told younger lawyers who’ve asked for career guidance that you need to be alert to opportunities around you and factor them into your decision-making process. 

Arthur Matthews, a very dear friend I met at the SEC, and very much like a brother to me, always had an expression, that I found both amusing and right on point. He said you should always position yourself for good luck. It’s true. You have to let yourself take advantage of possibilities, and hope that good luck hits. In my case, I never would have thought of becoming an employee of the Securities and Exchange Commission but for the serendipitous occurrence of having a national moot court issue that was related to securities laws and having SEC officials judge my oral arguments. 

Who was your first mentor at the SEC? 

My ultimate mentor was Ray Garrett, Jr., the SEC’s Chairman from 1972–73. He was like a father to me, as well as a professional mentor. But, my first true mentor at the SEC was Frank Wheat. He was an SEC Commissioner; after I had been at the SEC for about nine months, he had a vacancy in his legal assistant position. I worked with Frank for almost a year before he retired. He was brilliant, and very respectful of the SEC and its staff. The first instruction he gave me was that, whenever I needed to talk with SEC staff members, I should never ask them to come to my office. If I wanted to talk with the staff, I should go to their offices. It may seem like a small thing, but it was a very powerful reflection of his respect for the staff. It was a lesson to which I tried to adhere throughout 45 years (thus far) of my professional career. 

I also translated that into a mantra, which is, “There are no insignificant people.” I think it’s crucial to recognize that everyone, no matter what their position, station, or relationship to you, is significant. Frank took me under his wing; he was a marvelous lawyer but an even better human being, someone you could learn a lot of life’s lessons from. 

The very first day in his office, I arrived about 7:00 in the morning. I wanted to be sure I arrived ahead of Frank so he would see I was serious and dedicated. At about 8:00, I heard a huge ruckus outside the office, a lot of heaving of breath, and I became very nervous because it sounded like someone might be having a heart attack. I ran out of my office, and there was Frank catching his breath. Our office was on the seventh floor, and every morning Frank climbed up seven flights, two steps at a time, never pausing for air or rest. Frank was a great believer in exercise, a classic lover of all things outdoors, and a preservationist.

In 1975, you became the Commission’s youngest-ever general counsel. What was that like? 

It was exhilarating and very gratifying, but it also placed a great deal of responsibility on my shoulders. It was a wonderful job and a wonderful opportunity to hone my counseling skills, and assist not just the Commissioners but all the divisions. Those were three incredibly rewarding years. 

When you joined Fried Frank, what was it like to transition from government work to private practice? 

It was very different, most obviously because I now was on the other side of specific issues. But one thing I took with me when I left the SEC was great compassion for the work of the agency and the difficulties that confront government employees. It’s difficult to represent the public interest and deal with criticism from various private interests – not because you aren’t representing the public interest well, but because you're not providing help to those private interests. All private interests want government to be more responsive to their needs. It’s a legitimate concern on their part. But in the government, your focus is on the mandate of the agency and not how to help certain groups. 

The notion that people who leave the agency capitalize on their government positions is really a canard. Coming out of the SEC, I had great respect for its work, its mission, the Commissioners, the agency and most importantly, its employees. As a private practicing lawyer, I either turned down or was not retained by various potential clients when I explained to them how I would approach an issue, frequently because those prospective clients thought I was too sympathetic to the Commission’s point of view. My view was I knew the right way to disagree with the SEC and its staff, and I knew the right way to agree with them, yet still promote my clients’ interests zealously, as lawyers must do. 

Often, people on the outside do not understand why the Commission’s staff may take certain positions. Whether or not the position is correct, the staff is thoughtful. Positions are arrived at honestly and carefully. If you believe a staff position is wrong, one thing an outside lawyer must do is explain that to the staff in ways that will resonate with their view of what the public interest requires. So for me, I felt it was a logical extension of the work I had done at the Commission. 

What was the highlight of serving as SEC Chair? 

Becoming SEC Chair was for me the pinnacle of my career. I have great affection for the agency. Over 23 years in private practice that preceded my Chairmanship, I thought I had insights into ways the Commission could be even more effective, and I was anxious to help the agency as it started the new millennium. Being SEC Chairman was the only job I ever lusted for. For me, it was the culmination of my professional career. 

Being appointed Chairman was incredibly awesome, but also daunting because it’s a large responsibility. Ironically, virtually from the moment I walked into the office I had to keep examining the bottom of my shoes to see what I had stepped in – almost instantly, 9/11 occurred, the stock markets all went down and there I was with the responsibility of making decisions designed to get our securities markets back up and running, during a time of great national stress. There was no honeymoon period or time to get the lay of the land. It was basically, “Good morning, we’re in a crisis.” And it stayed that way through the time I left. Part of that was incredibly exciting, but it also was very draining. I wouldn’t have traded that opportunity for anything, and I still wouldn’t. It was a privilege to serve the public as SEC Chairman. 

Describe your work now with Kalorama Partners, a law and consulting firm. 

When I left the Commission the second time, I wanted to become a force for positive change. That meant, as a matter of personal preference, I did not want to be the SEC’s adversary. What I wanted to do was create a strategic business-consulting firm that would help companies that wanted to be better. Our principal efforts fall into a number of areas. 

A major effort is governance: how companies can govern themselves to be more effective, and to fulfill the demands the public and government place on them. Another major effort is directed at helping companies, directors, and regulated entities understand regulatory obligations. We also devote a great deal of effort to assisting companies, firms, and individuals with complex compliance issues. We also help companies and individuals navigate the complexity of presenting new products, services, and ideas to decisionmakers in ways that promote the public interest and make them acceptable to the government and the public. 

If companies are in the middle of an enforcement investigation, I believe that, even if they want to argue that they did nothing wrong, they should nonetheless look at the allegations from the government’s perspective, and try to improve or change the way they handle the matters that are now the subject of a governmental accusation. That ensures directors and shareholders that, whatever the outcome of the existing controversy, there are reasonable assurances that similar problems are even less likely to recur. That means that we perform a fair number of internal reviews which are enormously rewarding, because we help companies do better. It’s constructive, positive, complex, and intellectually difficult work. At the end of the process, we hope to leave our clients in a better position from the position in which we found them. 

How do you like being a regular television commentator? 

I guess I must enjoy it, since I do a fair amount of it. It’s part of what I described earlier – my desire to bridge the gap between having been at the SEC and now being on the outside, looking in. 

People read about SEC actions or decisions, but don’t necessarily understand what was behind them. In many cases, even government can’t explain all its decisions, for various reasons. I analyze why the government may have done something, or explain to the public what the consequences are of the government’s action. I find it interesting and invigorating to try to take a complex subject and talk about it in ways that non-experts can understand, and point out the benefits and disadvantages of whatever actions may be involved. 

In some senses, I'm a perpetual teacher. While at the SEC and in private practice, I regularly taught law school classes and I continue to enjoy doing that. Explaining new initiatives, talking about what those initiatives might mean, and how people can comply with them are things that I very much enjoy. 

How have you enjoyed being a part of the ABA’s Business Law Section? 

I was flattered to be asked and I'm honored to serve as an Advisor. The ABA has some great initiatives. Seeing all the constructive things that the ABA is trying to do and also having the chance to be available to young lawyers is a wonderful opportunity for me. So I have greatly enjoyed it so far and I'm looking forward to its continuation. It reminds me how important the ABA is. 

One last sort of personal observation on that: one of my great claims in life is that when Dixie Johnson was starting out as a brand new lawyer, she came to Fried-Frank and unfortunately for her, she was assigned to my group. I have watched her over the years and I got the chance at the Leadership Conference a week or two ago in Arizona to watch her leadership skills. And it was very rewarding to see someone I had identified from early on as a very, very bright, creative, capable professional succeed and develop recognition that she more than deserves. So watching all of that a few weeks ago just made me feel very, very gratified to be a part of the ABA at this particular point in time. 

What are your interests outside the law? 

My biggest preoccupation is with movies. I’m a devotee of cinematic arts. About 15 years ago, my wife and I built a small movie theater in our home. Over the years, I have amassed a collection of 4,400 DVDs. I find movies often contain a great deal of wisdom. As SEC Chairman, I gave a large number of speeches, almost all of which contained references to movies. 

Another strong interest I have is in reading. I love learning about facets of life that I will never get a chance to sample myself. 

A third interest is photography. I don’t view myself as having great artistic abilities, but I enjoy taking pictures. 

Another is travel. My wife and I are empty nesters and we are traveling together as we did in the early years of our marriage. It’s very gratifying to know that my soul mate and life mate over the past decades is even better now than she was when we got married. Traveling together is great, because I get to see things not solely through my own eyes, but through hers. 

The last non-legal interest, but probably the most significant, is that we’re now grandparents. It amazes me because grandparenting is the one aspect of life that is completely underrated. No matter how effusively or hyperbolically one describes grandparenting, it’s better than that!

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