October 8, 2002
The Honorable Harvey Pitt Dear Mr. Chairman: We are writing to express our concern and displeasure regarding press reports indicating that, due to pressure from the accounting industry and its Republican supporters in Congress, you are backing away from the choice you and other members of the Securities and Exchange Commission (SEC) earlier had favored to head the new oversight board that will oversee the accounting profession.1 These reports, if true, raise serious questions as to the level of your commitment to reforming the accounting profession. According to these press accounts, "industry executives and at least one prominent Republican lawmaker had complained that the top choice, John J. Biggs, was too tough on the industry." We note that Mr. Biggs’ nomination was widely hailed by many market participants, academics, and by former SEC Chairman Levitt.2 We have heard favorable reports about Mr. Biggs from institutional investors, pension funds, and other market observers and participants. The editorial page of the Wall Street Journal, hardly a proponent of excessive regulation, called Mr. Biggs "a sensible choice."3 We were therefore startled and dismayed to read in Friday’s New York Times that "the selection process has been thrown into turmoil, as the accounting profession, which lost the battle in Congress two months ago over how it should be regulated, has turned to Mr. Pitt, one of its former top lawyers before he joined the government, to try to win the war." The accountants are reportedly being supported by some on Capitol Hill who object to Mr. Biggs for not being sufficiently "moderate" (implying that Mr. Biggs might actually take needed action). We urge you to resist the special pleadings of your former clients in the accounting profession, and appoint Mr. Biggs as head of the new accounting oversight board. As you know, over the last year the accounting profession has, by its own greed and malfeasance, lost the confidence of the investing public. That is why the Congress enacted the Sarbanes-Oxley Act which, among other things, established an accounting oversight board to establish and oversee standards of ethical conduct for the profession, to oversee the audits of public companies, and to protect the interests of investors and the public. There is very little public confidence in these matters now, resulting in a profoundly negative effect on our capital markets and the economy. The accountants cannot, and should not, be permitted to pick their regulator, or exercise veto power over the Commission’s choices in this matter. In closing, we join our colleagues Minority Leader Gephardt and Congressmen LaFalce and Frank in urging you and the rest of the Commission to move promptly to approve Mr. Biggs to be Chairman of the Public Company Accounting Oversight Board. Thank you for your consideration in this matter.
Sincerely, JOHN D. DINGELL EDWARD J. MARKEY
1 Stephen Labaton, "S.E.C. Chief Hedges on Accounting Regulator," The New York Times, October 4, 2002, at C1; Michael Schroeder and Cassell Bryan-Low, "GOP Objects to Biggs to Run Oversight Board," The Wall Street Journal, October 2, 2002, at C12; and "Post-Enron Reform Questions," The Washington Post, October 4, 2002, at A28. 2 Stephen Labaton, "Chief of Big Pension Plan is Choice for Accounting Board," The New York Times, October 1, 2002, at C4; and Judith Burns, "Levitt Praises Pitt as 'Best Qualified' to Head SEC," Dow Jones, October 3, 2002. 3 "Fighting Mr. Biggs," The Wall Street Journal, October 4, 2002, at A12. Enclosures cc: The Honorable W.J. "Billy" Tauzin, Chairman The Honorable Michael G. Oxley,
Chairman The Honorable John J. LaFalce,
Ranking Member | |
|
 |
 |
 |
 |
 |
 |
 |
 |
