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Bush SEC nominee worries some consumer advocates

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WASHINGTON — New declarations by President Bush's nominee to head the SEC in favor of reviewing securities laws and listening more to Wall Street have made some consumer advocates uneasy and heartened the industry.

Securities lawyer Harvey Pitt, at his confirmation hearing Thursday by the Senate Banking Committee, also promised to vigilantly enforce rules protecting investors as chairman of the Securities and Exchange Commission.

In his first public remarks since he was named in May, Pitt addressed concerns that his background as a prominent attorney — representing Wall Street figures such as Big Five accounting firms and corporate executives — could create conflicts of interest for him as SEC chairman.

If confirmed, he said, "I will ensure vigilant enforcement of sound rules that protect all investors against fraudulent, deceptive and manipulative misconduct. . . . I will be trading some very wonderful clients for the most wonderful client of all: the American investing public."

Pitt told the senators that "real-time" enforcement of securities crime was needed, to cut the long periods from the start of an SEC investigation to the imposition of fines and sanctions.

At the same time, he said securities laws must be reviewed because many are obsolete and impose an unfair burden on market participants — striking a tone favoring an easing of government regulation, as have many officials of the Republican administration.

Pitt compared the federal securities laws — many of which are nearly 70 years old and were enacted in response to the stock market crash of 1929 — to the Internal Revenue Code. Both are difficult to understand, he said.

"I would like the SEC to lead a review of the requirements it administers, and the regulations it imposes, to be certain they are sound, reasonable, cost-effective and that they promote competition," Pitt said in his opening statement.

Barbara Roper, director of investor protection for the Consumer Federation of America, had a different perspective.

"We don't think the time is right for deregulating the securities industry," Roper said after the hearing. With about half the nation's households invested in the market, investor protections should not be lessened, she insisted.

Wall Street's biggest lobbying group, which had opposed some of the changes pushed by former SEC chairman Arthur Levitt, liked what it heard in Pitt's testimony.

"He demonstrated true insight into the challenges facing capital markets and how he plans to direct regulatory policies to address those challenges," said Jim Spellman, spokesman for the Securities Industry Association.