Harvey Goldschmid

Harvey Goldschmid
Born	May 6, 1940 (1940-05-06) (age 69) New York City
Nationality	United States
Fields	Corporation law, securities law
Institutions	Columbia Law School
Alma mater	Columbia Law School Columbia University

Harvey Goldschmid (born May 6, 1940) is currently the Dwight Professor of Law at Columbia Law School. From 2002 to 2005, he served as a member of the Securities & Exchange Commission, where he was an "intellectual heavyweight" and, though a Democrat, was a chief ally of Republican chairman William H. Donaldson. He is also an advisory board member of the Millstein Center for Corporate Governance and Performance at the Yale School of Management.^[1]

Harvey Goldschmid’s Role in Securities Regulation

Harvey Goldschmid has been recognized as the most influential SEC Commissioner who did not become a Chair in the agency’s history.^[2]

Harvey’s relationship with SEC Chair Arthur Levitt—initially as an advisor, then as general counsel—was particularly consequential. Harvey was the lawyer’s lawyer who supervised the revision of the pivotal SEC Rule of Practice 102(e) and helped draft Regulation FD. On issue after issue, ranging from accounting independence to bank regulation, Harvey’s efforts were crucial to the success of Arthur Levitt’s chairmanship.

During the chairmanships of Harvey Pitt and Bill Donaldson, Harvey continued his service as a Commissioner. His inevitable preference was to work quietly and behind the scenes to help craft the most appropriate possible consensus policy at the SEC. His term as Commissioner should be remembered for quiet victories on a myriad of issues implementing Sarbanes-Oxley rules, among many other topics.

But Harvey’s period as Commissioner will also be remembered for a small number of very public occasions on which he took a stand on principle. His statement opposing the confirmation of Bill Webster as the first chair of the Public Company Accounting Oversight Board was a profile in courage. Harvey knew and admired Bill Webster. Harvey has a rare gift for friendship which made opposition to a man as extraordinary as Bill Webster particularly painful. The transcendent issue, however, involved a dysfunctional appointment process that had earlier offered the chairmanship to then Teachers Insurance and Annuity Association-College Retirement Equity Fund (TIAA-CREF) CEO John Biggs and that subsequently led to an SEC Chair failing to share material information with fellow Commissioners. These were inexcusable failings. Harvey, politely but firmly, said as much when Bill Webster was confirmed by a three-to-two vote over Harvey’s dissent. The bungling of the confirmation of Webster became a proximate cause of the subsequent resignations of both Bill Webster and Chairman Pitt. Never in the history of the SEC were relations among Commissioners as strained as they had been during the last tempestuous months of Harvey Pitt’s chairmanship.

During the subsequent chairmanship of Bill Donaldson, the Commission had a new Chair, an expanded budget, and dramatically improved morale. Harvey’s role in some respects was even more remarkable working with Chairman Donaldson than it had been working with Chairman Levitt. The two, although in different parties, worked well and constructively together. Donaldson in many instances grew to trust Harvey’s judgment as much as Levitt had. To be sure, there were occasional differences, most notably over shareholder proxy access. But these were dwarfed by the number of issues on which Bill Donaldson and Harvey Goldschmid worked constructively together.

History is the study of consequences. In a certain sense the ultimate history of the Levitt, Pitt, and Donaldson chairmanships cannot be written for decades, because only in retrospect will we be able to appreciate the full implications of the statutory rule and enforcement developments during that period at the Commission.

Nonetheless, even as close in time as we now are to Harvey’s service as an SEC Commissioner, it is possible to articulate some tentative judgments. On a personal level, Harvey Goldschmid’s contributions to the SEC in particular and corporate and securities law in general were always marked by a sense of gravitas, a mastery of complexity, and an ability to distinguish issues on which compromise was appropriate from those in which matters of principle had to dominate. Harvey Goldschmid loved to work quietly and thoughtfully on systematic review policy, and ultimately became a public figure defending the systems of full disclosure, ethical behavior, accountability, and effective institutional structure with an increasingly powerful voice.

Throughout his career, Harvey has published a good deal, but he should receive particular credit for being the drafter or editor of significant institutional documents. For many years Harvey was one of the reporters on the American Law Institute’s (ALI) Principles of Corporate Governance project. Perhaps the most effective part of this document is Part IV, which addressed the business judgment rule and duty of care and which Harvey took years drafting and revising. He is a good illustration of the adage “To lead, listen.” Harvey not only listened; he heard and found a way of articulating these essential corporate law concepts in ways that strengthened both shareholder protection and corporate effectiveness at the same time. To take another example, his work on SEC Rule of Practice 102(e)(iv) is but four short paragraphs long. These paragraphs, nonetheless, masterfully articulate “improper professional conduct” in ways that ended years of litigation and over time have proven to be effective for the auditing profession.

In the broadest sense, Harvey Goldschmid’s career reflects a determination to improve the integrity and accountability of business corporations in ways consistent with their most efficient operation. There is a pivotal element of balance in his work. Harvey is capable of transforming shouting matches on issues concerning the corporate board into thoughtful discussions of how a new standard actually should operate and what the costs and benefits of proceeding with a proposed standard would be. He has an unerring genius for appreciating the operational implications of new rules.

References

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