Arthur Levitt was the 25th Chairman of the Securities and Exchange Commission. First appointed by President Clinton in July 1993, the President reappointed Chairman Levitt to a second five-year term in May 1998. On September 9, 1999, he became the longest-serving Chairman of the Commission.
Background
Arthur Levitt was born on February 3, 1931, in Brooklyn, New York, United States. He is the son of Arthur and Dorothy (Wolff) Levitt. His father served as comptroller of the state of New York for almost a quarter of a century, and the younger Levitt benefited from the lessons learned while watching his father protect a large pension plan from politicians who wanted to make use of the money to cover budget deficits.
Education
Arthur attended Poly Prep Country Day School. He did not immediately pursue finance as a career path. He studied English at Williams College, penning a senior thesis on the playwright Lillian Hellman before he graduated Phi Beta Kappa in 1952 before serving for two years in the Air Force. He then was accepted at Yale Law School, but his father advised him to pass.
Levitt was awarded honorary doctorates from Williams College in 1980, Pace University in 1980, Hamilton College in 1981, Long Island University in 1984, and Hofstra University in 1985.
Arthur Levitt worked as an assistant promotional director in the marketing department of Time magazine as his first full-time job from 1954 to 1959. In 1959 Levitt moved to Kansas City to take a post with Oppenheimer Industries and sold cattle herds and ranches to the wealthy as tax shelters from 1959 to 1962. One of his clients suggested he would do well on Wall Street, and so in 1963 Levitt returned to the New York area with his family and began at Carter, Berlind & Weill, a brokerage firm, to sell securities and bonds in a cutthroat, highly competitive environment.
Levitt rose through the ranks at the firm, garnering an increasingly high-profile roster of clients that included conductor Leonard Bernstein and composer Aaron Copland, and eventually became its president by the end of the decade. The firm eventually became Shearson Hayden Stone, which was sold to the American Express Corporation in 1981 and later became Citigroup. But Levitt also began to see a change in business ethics during the decade, as brokerage firms scrambled to stay profitable in the merger - mania of the era and became increasingly focused on the bottom line. Brokers, for example, earned their commissions not on how well their clients' money performed, but on the number of transactions they executed.
From 1978 to 1989 he was the Chairman of the American Stock Exchange. Levitt was credited with rescuing it, in part by modernizing its operations and trading floor during his eleven-year tenure. Some began to suggest that he might do well in politics, and even New York State Governor Mario Cuomo urged him to run for a United States Senate seat. However, Levitt's wife was said to be adamantly disinterested in public life.
From 1989 to 1993 he served as the Chairman of the New York City Economic Development Corporation and, with onetime Commerce Secretary Robert Mosbacher, established a small-business lobbying organization in Washington called the American Business Conference. A skilled political fund-raiser with a wealth of Wall Street and Washington contacts of both party stripes, he set up a 1992 dinner for Democratic presidential hopeful Bill Clinton that raised $750,000. President Bill Clinton named him chairman of the Securities and Exchange Commission in 1993 and reappointed him to a second five-year term in May 1998.
Key successes of Levitt's first term include reforming the debt markets, improving broker sales and pay practices, promoting the use of plain English in investment literature and Securities and Exchange Commission communications with the public, preserving the independence of the private sector standard-setting process, promoting the independence of accountants, and encouraging foreign companies to list on United States markets.
During Chairman Levitt's tenure, the Securities and Exchange Commission has established the Office of Investor Education and Assistance and created the popular SEC's World Wide Web site, thus making all corporate filings available to the public free of charge. Chairman Levitt has been supportive of high-tech and online securities trading. In order to reduce the number of frivolous class-action lawsuits against high tech companies, he supported the passage of both the Securities Litigation Uniform Standards Act in 1998 and the Private Securities Litigation Reform Act in the 104th Congress.
Chairman Levitt has also sought to raise the industry's sales practice standards and eliminate the conflicts of interest in brokers' compensation. During his tenure at the Securities and Exchange Commission, Levitt worked to protect the interests of the individual investor which manifested itself most clearly in the passage of Regulation FD. Regulation FD which went into effect in October 2000 mandates that public companies must broadly disseminate material non-public information simultaneously to all investors. The Commission, together with the industry has developed the Profile Prospectus and other plain English guidelines for investment products in an effort to make disclosure documents easier to understand without compromising the value of the information provided to investors.
The Securities and Exchange Commission has worked to sever ties between political campaign contributions and municipal underwriting business, (a practice is known as pay-to-play) as well as improving the disclosure and transparency of the municipal bond market, Chairman Levitt tried to introduce rules barring CPA firms from providing consulting services to their audit clients, believing that consulting fees offer an unhealthy temptation to professional services firms that conduct certified audits. Levitt's initiatives were met with a determined lobbying effort by the accounting industry. Eventually, Levitt was forced to water down his proposals and he accepted a requirement that made companies disclose the dollar amount of the audit and consulting fees they pay.
Since leaving the Securities and Exchange Commission in February of 2001, Levitt has continued to advise both individual investors and large corporate entities on sound money management practices for the twenty-first century.
Levitt's bestselling book, Take on the Street: What Wall Street and Corporate America Don’t Want You to Know/What You Can Do to Fight Back was published in October 2002.