Facing mounting pressure and increased criticism, Securities and Exchange Commission Chairman Harvey Pitt resigned late last night.

A fund consultant, meanwhile, says it is too early to tell how the shake-up will affect the mutual fund industry, but reforms that had been part of Pitt’s agenda, such as improving funds’ portfolio disclosure, will obviously be tabled.

Pitt, who has filled the role for 14 months, has been under intense scrutiny in past weeks for his selection of William Webster to chair an accounting industry oversight board. Pitt failed to disclose to the other commissioners that Webster, a former director of the CIA and FBI, headed the board of directors’ auditing committee at U.S. Technologies, a firm that is facing investor lawsuits alleging fraud.

The Webster revelations led the SEC commissioners to request an internal investigation of the selection. Webster’s future at the post is unclear; he has stated that he would step down from the post if he could not do the job effectively. Pitt has also been under fire in recent months for his close ties with the accounting industry and his decision to meet with heads of companies under investigation by the SEC.

The SEC, meanwhile, is supposed to be cleaning up a rash of corporate accounting scandals, such as those at Enron and WorldCom, that has undermined investors’ confidence and contributed to declines on Wall Street.

Geoffrey Bobroff, president of mutual fund consulting firm Bobroff Consulting in East Greenwich, Rhode Island, said that it is too early to tell how Pitt’s resignation will affect the fund industry. "We don’t have a good feel for it yet. The fund world is going to have to wait and see what the implications are in the long-term," he said, adding that, in the short-term, items such as portfolio holdings disclosure are likely to be off the table. "(Pitt’s) agenda is obviously off the table and we’ll have to wait and see who his successor is."

In a letter to President Bush, Pitt said: "Unfortunately, the turmoil surrounding my chairmanship and the agency makes it very difficult for the commissioners and dedicated SEC staffers to perform their critical assignments. Rather than be a burden to you or the agency, I feel it is in everyone's best interest if I step aside now, to allow the agency to continue the important efforts we have started."

Although a White House spokesman said that Bush did not ask for Pitt’s resignation, it is no secret that Bush was angered by Pitt’s failing to inform the administration of Webster’s history, and it promptly accepted his offer to step down.

The White House is not expected to have an immediate replacement for Pitt. A number of names have been mentioned as possible replacements, including former SEC Chairman Richard Breeden, former New York City Mayor Rudolph Giuliani, former SEC general counsel Jim Doty, retired NASD chairman Frank Zarb, Assistant Attorney General Michael Chertoff and Paul Atkins, one of the current SEC commissioners. However, Breeden declined, according to published reports, and Giuliani said during a recent appearance on "Larry King Live" that he is not currently interested in another job.

As for Pitt’s replacement, Bobroff said he has seen the names circulating as possible candidates and a lot of them "don’t make a lot of sense," including Giuliani. While he does not have an idea of who will take the reigns, "what we don’t need is another cop running the SEC," he said.

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