To get an expert's view, we asked former Securities and Exchange Commission Chairman Harvey Pitt whether companies were disclosing what investors need to know in order to weigh the risk that companies will undergo executive shake-ups, be forced to restate earnings or pay penalties or fines. Here's an edited transcript of the interview with Pitt, who is founder and chief executive of Kalorama Partners, a New York consulting company.

Q How are companies doing so far?

A Companies are showing very good initiative, or at least a number of companies are. It's very difficult for some companies because of the advice they get from lawyers, and also because of the realities.

There are conflicting pressures. One pressure is to get as much information out as quickly and clearly as you can. But by the same token, if things are still in a state of flux or are ongoing you don't want to be in a position of saying, "This is what we learned one day, only to discover a day or two or a week later that you learned something different."

Q How would you grade Apple Computer's disclosure Oct. 4, when it said Chief Executive Steve Jobs was "aware of" stock options abuses but found "no misconduct" by current managers, including Jobs?

A I don't know the fact of Apple's case, but I thought in particular that the disclosures Apple came up with were actually quite good. Jobs indicated he knew, but he also said -- and this is obviously of great importance because he's of great importance -- that he didn't have any personal benefit from any of these. That was a very important disclosure and a very smart disclosure.

That was an example of being a little more forthcoming and giving investors the type of information they needed. My assumption is Wall Street was reasonably reassured.

Q Yet Apple left out a number of key details, such as which of Steve Jobs' option grants was tainted and what he knew when.

A I haven't studied Apple's disclosures the way you have. It's possible in hindsight you could say maybe they should have done this or done that.

From a big-picture point of view, they had to come to terms with two of the most important issues shareholders wanted to know: Did he know of any of this? And did he benefit from any of it? Or put another way: Do I think his tenure is in jeopardy?

The problem is there's this tension. Most people look at disclosure as, "What do we have to say?" Sometimes they look at, "How little can we get away with saying?" And sometimes they say, "How can we word it so it's accurate but not necessarily as fully flavored as it should be?" Those are bad decisions.

I think, unfortunately, many lawyers tend to look at disclosure that way. Businessmen and businesswomen ought be looking at disclosure as what will inform people about what's really going on. How can I tell what happened and what it means?

Q As a former head of the SEC, would you say the agency has a tough balancing act? It has to clean up the problem and deter companies from doing it again -- but without punishing shareholders who own the stock.

A This may be just my own inherent bias, but I have very little sympathy for the companies that were engaged in real backdating. If you look at the Brocade and Comverse indictments, that conduct was raw. I grew up in Brooklyn, and we had a word for that. We called it fraud.

When people lie and deceive and falsify documents, I have zero sympathy, and I think there should be zero tolerance for those people. I don't believe our capital markets can flourish if we have people in there really trying to cheat and lie.

On the other hand, there are cases where people made mistakes, maybe cases where people did things inadvertently, maybe cases where companies backdated option grants but had poor procedures. That's where the tension comes into play. It places a heavy premium on regulators and prosecutors to be balanced in their judgments. Just because there was backdating doesn't mean it was a hanging offense. But if it was backdating with false documents and that sort of thing, I do think it's a hanging offense.

The SEC and U.S. attorney have done a very good job of focusing at least at the outset on cases, based on the allegations, that are incredibly raw. That being the case, I think their judgments are sound.

Then you also need to look at what the company is doing -- how does the company rectify the situation? If what you want is for companies to be law-abiding, then you have to give them credit when they take steps to bring themselves into compliance.

The SEC is showing a great amount of balance in how it approaches these issues. It's not rushing to make headlines. It's proceeding in a way that is thoughtful and appropriate. That is the hallmark of good regulation and good enforcement.