US financial regulator resigns

Mr Pitt (left) blundered in his choice of Mr Webster

The embattled chairman of the US Securities and Exchange Commission (SEC), Harvey Pitt, has resigned.

Rather than be a burden to...the agency, I feel it is in everyone's best interest if I step aside now

Harvey Pitt

The head of the main finance watchdog, who was appointed only a year ago, had been under heavy pressure over his response to the numerous corporate financial scandals over the last year.

In the latest dispute, his choice to head an accounting industry oversight board back-fired, after it later turned out the appointee had links to a company being investigated for fraud.

The White House accepted the resignation, although only last week it had offered renewed backing for tenure.

Mr Pitt, however, will stay until a successor is found.

Mr Pitt's troubles had been seen by many experts as a distraction for the SEC, at a time when the market was still reeling from corporate scandals - including Enron and WorldCom - and the economy was becoming increasingly fragile.

The BBC's North America business correspondent Stephen Evans says that Mr Pitt's departure may now open the way for tougher reform.

Dogged by controversy

Our correspondent says that Mr Pitt was in charge of creating the new system to police corporate America, but became embroiled in controversy himself.

Pitt was seen as bowing to the accounting industry

Last Thursday he came under fire for his failure to disclose to fellow SEC board members sensitive information about the man chosen to head the new Public Company Accounting Oversight Board - William Webster.

Just days after the appointment, it emerged that Mr Webster had been the audit committee chairman of US Technology - a company facing charges of fraud.

Mr Pitt had also been criticised for having launched an internal investigation into Mr Webster's appointment after the scandal broke - in effect an investigation into his own behaviour.

Last month, Democrats asked the president to remove Mr Pitt, who - as a former lawyer for accountancy firms - was seen as bowing to the accounting industry and blocking the appointment of a tougher overseer.

In a letter to President George W Bush, Mr Pitt said that "rather than be a burden to you or the agency, I feel it is in everyone's best interest if I step aside now".

"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."