Arthur Levitt

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Arthur Levitt
Arthur Levitt (Former Chairman, Securities and Exchange Commission).jpg
Arthur Levitt at Financial Times and Goldmans Sachs Business Book of the Year Award 2012
25th Chairman of the Securities and Exchange Commission
In office
July 1993 – February 9, 2001
President Bill Clinton
Preceded by Richard C. Breeden
Succeeded by Harvey Pitt
Personal details
Born (1931-02-03) February 3, 1931 (age 83)
Brooklyn, New York
Political party Democratic
Spouse(s) Marylin Blauner
Alma mater Williams College (B.A.)

Arthur Levitt, Jr. (born February 3, 1931) was the twenty-fifth and longest-serving Chairman of the United States Securities and Exchange Commission (SEC) from 1993 to 2001. Widely hailed as a champion of the individual investor, he has been criticized for not pushing for tougher accounting rules. Since May 2001 he has been employed as a senior adviser at the Carlyle Group.[1] Levitt also serves as a policy advisor to Goldman Sachs and as a Director of Bloomberg LP, parent of Bloomberg News.[2]

Early life and career[edit]

Growing up in a Jewish family in Brooklyn, Levitt received his first exposure to the world of finance through his father, Arthur Levitt, Sr., who served as New York State Comptroller for 24 years and was sole trustee of the largest pension fund in America at the time. While in Brooklyn, he attended and graduated from Poly Prep Country Day School in 1948. Subsequently, Levitt graduated Phi Beta Kappa from Williams College in 1952, before serving for two years in the Air Force. He first worked as a drama critic for The Berkshire Eagle, and after the Air Force, he was with Time-Life for five years before selling cattle and ranches as tax shelters.

In 1963, Levitt joined the relatively young brokerage firm Carter, Berlind & Weill, founded just three years earlier by Sanford I. Weill.[3] Levitt's name was eventually added to the firm's when it was renamed Cogan, Berlind, Weill & Levitt in the mid-1960s although through a series of mergers the firm eventually evolved into Shearson Loeb Rhoades. This experience with retail customers was a source of his interest in the small investor. After sixteen years on Wall Street, Levitt became the Chairman of the American Stock Exchange (AMEX) in 1978. In 1989, he left the AMEX to serve as Chairman of the New York City Economic Development Corporation until 1993.

Before joining the SEC, Levitt owned Roll Call, a newspaper that covers Capitol Hill, which he purchased from the paper's founder, Sid Yudain, in 1986.[4]

Chairman of the SEC[edit]

Levitt was appointed to his first five-year term as Chairman of the SEC by President Clinton in July 1993 and reappointed in May 1998. He left the Commission on February 9, 2001, and was succeeded by Harvey Pitt. Levitt has said that he first learned of his being considered for the job from The Wall Street Journal.

At the time Levitt came to the SEC, the Financial Accounting Standards Board (FASB) had proposed requiring companies to record stock options on their income statements, which split the accounting industry and was opposed by many in the American business community. According to a Merrill Lynch study, expensing stock options would have reduced profits among leading high-tech companies by 60% on average. Congress began to exert pressure on the FASB, and on May 3, 1994, the Senate, led by Democratic Senator Joe Lieberman, offered a non-binding resolution urging FASB not to adopt the proposed rule; the vote in favor was 88–9. Concerned that insensitivity to this sentiment in Congress might threaten FASB as an independent standard setter, Levitt urged the FASB to not go ahead with the rule proposal. He later said this "was probably the single biggest mistake I made in my years at the SEC."[5]

In September 1998 at New York University, he gave a speech entitled "The Numbers Game". It addressed five ways in which corporations were managing earnings (big bath charges, creative acquisition accounting, cookie-jar reserves, materiality, revenue recognition). In his speech, Levitt advocated improving the transparency and comparability of financial statements.

In 1997, the SEC under Levitt's leadership approved the exemption of some Enron partnerships from the tight accounting controls of the Investment Company Act of 1940. Without this exemption, critics maintain, the company would have been constrained by strict rules found in 1996 legislation that would have prohibited certain foreign investments and the shifting of debt to its foreign subsidiary shell companies.

During Levitt's tenure at the SEC, he was widely viewed as a pro-investor advocate and received favorable press coverage. More recently he has come under criticism for failing to act against 1990s bull market abuses and not uncovering Bernard Madoff's Ponzi scheme.

After the SEC[edit]

Mr. Levitt serves on the Board of Directors for RiskMetrics Group.

In 2005, Levitt was named a special advisor to the American International Group's board of directors and the board's nominating and corporate governance committee following the resignation of CEO and Chairman Maurice "Hank" Greenberg, who left after an investigation into the firm's accounting practices by New York Attorney General Eliot Spitzer.

Levitt oversaw an audit published in August 2006, by Kroll Inc. – where he is a consultant – describing how the City of San Diego had allowed a pension deficit of $1.43 billion. The report blamed around 30 city officials, including five incumbent council members. According to the San Diego Union Tribune [1], Kroll charged the City of San Diego $21 million for the report, with Levitt's time billed at $900 per hour.

Awards and honors[edit]

In January 2001, Levitt received the "Award for Distinguished Leadership in Global Capital Markets" from the Yale School of Management.

The Arthur Levitt State Office Building in downtown Manhattan was named for him until it was sold to private developers in 2000.

See also[edit]

Notes[edit]

  1. ^ The Carlyle Group : Levitt, Arthur
  2. ^ Levitt, Arthur (October 29, 2009). "Taxpayers Fleeced When Leaders Tap Muni Market: Arthur Levitt". Bloomberg L.P. Retrieved August 10, 2013. 
  3. ^ Arthur Levitt: Career Highlights. Bloomberg BusinessWeek
  4. ^ Rapp, David (2013-10-21). "Roll Call Founder Sid Yudain Dies at 90". Roll Call. Retrieved 2013-11-17. 
  5. ^ "Congress and the Accounting Wars". Bigger Than Enron. FRONTLINE. Archived from the original on 23 September 2006. Retrieved 2006-10-15.  Containing excerpts from FRONTLINE's interviews.

References[edit]

  • Labaton, Stephen (January 22, 2002). "Exemption Won in 1997 Set Stage For Enron Woes". New York Times. 
  • "Arthur Levitt" (– Scholar search). On Wall Street Magazine. June 2005. Archived from the original on September 11, 2006. Retrieved 2006-10-15.  [dead link] Levitt's biography as told by him to the editorial staff.
  • "SEC Biography: Chairman Arthur Levitt". U.S. Securities and Exchange Commission. Archived from the original on 20 October 2006. Retrieved 2006-10-15. 

Further reading[edit]

Government offices
Preceded by
Richard C. Breeden
Securities and Exchange Commission Chair
1993–2001
Succeeded by
Harvey Pitt