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Goldschmid: A counterbalance to the SEC’s chairman? New SEC commissioner Harvey Goldschmid and agency chairman Harvey Pitt share a few things besides a first name. They’re both well-respected securities lawyers, they’re both native New Yorkers, and they’ve both served as general counsel of the SEC. (Pitt was GC in the late seventies, Goldschmid in the late nineties.) But they definitely don’t share the same views. In fact, the Republican Pitt and the Democratic Goldschmid have been polar opposites in past SEC debates. On questions ranging from whether accountants should engage in consulting, to whether securities class actions should be curtailed, the two have consistently disagreed. Now that they’ll be sitting at the same conference table, the obvious question is whether the Harveys can get along. Attorneys familiar with both men and with the inner workings of the agency predict that consensus will prevail over confrontation. “People who are looking for high drama will probably have to turn to HBO instead,” says Barry Barbash, who headed the SEC’s division of investment management when Goldschmid served as the commission’s GC. Goldschmid, a longtime Columbia Law School professor and counsel at New York’s Weil, Gotshal & Manges, rejoined the SEC at the end of July. He says he is “anxious to serve” as a commissioner. “The difficulties are real,” he says, “but the opportunities are great.” (In addition to Goldschmid, Roel Campos, Paul Atkins, and Cynthia Glassman joined the SEC this summer. The vacancy-plagued agency now has its full complement of five commissioners for the first time since February 2001.) While securities lawyers expect Goldschmid and Pitt to have a professional working relationship, some observers nonetheless hope that the two Harveys continue their ideological battles. Since he was first suggested for the commission by Senate majority leader Tom Daschle, Goldschmid has been touted as a potential counterbalance to Pitt. Many private attorneys consider Goldschmid to be ideally positioned to offset the chairman’s conservative views. Numerous Battles Already This expectation stems from the history of past clashes between the two men. While serving as SEC general counsel and then as special senior adviser to Arthur Levitt, Pitt’s predecessor as chairman, Goldschmid helped draft a proposal to split the auditing and consulting functions of the large accounting firms. Pitt, then a partner in the Washington office of New York’s Fried, Frank, Harris, Shriver & Jacobson, represented all of the Big Five accounting firms as well as their trade group in the late nineties. He led the industry’s efforts to defeat the proposal, pushing instead for a toothless compromise. The departing Levitt reluctantly conceded to what he later described as the most “intensive and venal lobbying campaign” he had ever experienced. The Harveys also split on Regulation FD, a rule drafted largely by Goldschmid that bars companies from selectively disclosing financial information to favored insiders. Pitt opposed the regulation, and has said that as chairman he will seek to have it reviewed. The pair also found themselves on different sides of the debate over the Private Securities Litigation Reform Act. The controversial 1995 law placed limits on when securities class actions can be brought against accountants and corporate executives. Pitt spoke in favor of the law in congressional hearings; in contrast, Goldschmid supported President Bill Clinton’s veto, which was ultimately overridden. Most recently, Goldschmid, in his nomination hearings, opposed Pitt on the need to have the accounting standards board re-examine the rules governing the treatment of executive stock options. Goldschmid thinks the board ought to do so, while Pitt has stated repeatedly that he sees no reason to revisit the matter. Harvey Harmony Predicted The chairman and the commissioner will almost certainly continue to clash on some issues. But securities lawyers say that other factors, such as loyalty to the agency and a common approach to the job, will push the Harveys to iron out their differences. “Ninety-eight percent of the time, they are going to agree and pull the chariot together,” says Edward Fleishman, a former SEC commissioner who is now senior counsel at the New York office of Linklaters. He adds, “They are both fundamentally committed to the same goal-using the SEC to reform the world.” A mutual desire for agreement will also help minimize partisan debates, says Barbash, now a partner in the D.C. office of New York’s Shearman & Sterling. Goldschmid “is a very consensus-oriented guy,” Barbash says, adding, “He is absolutely not an ideologue who has to have things his way.” Pitt, in his year as chairman, has likewise shown himself to be someone who seeks input from others. “He is somewhat of a proceduralist,” Barbash says.

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