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Arthur Levitt Jr. (born 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.

Growing up 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. 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. He then sold cattle and ranches as tax shelters before joining a new brokerage firm, Carter, Berlind & Weill, which eventually evolved into Shearson Loeb Rhoades. 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.

Contents 1 Chairman of the SEC 2 After the SEC 3 Awards and honors 4 See also 5 Further reading 6 Notes and References

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 closing an accounting loophole that allowed companies to avoid recording stock options on their balance sheets, and the American business community was aligned with the accounting industry to fight the proposal. 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, passed a non-binding resolution condemning the proposal by a vote of 88-9. Along with the major shift in Congress that occurred with the elections, Levitt was concerned that any law enacted by Congress might kill independent standard setting. In what he later said "was probably the single biggest mistake I made in my years at the SEC", he urged the FASB to not go ahead with the rule proposal.^[1]

One speech he gave as chairman was in September 1998 at New York University. His speech, entitled "The Numbers Game," 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; however, more recently he has come under criticism for failing to act against 1990s bull market abuses.

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 dollars for the report, with Leavitt's time billed at $900 per hour.

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

• Securities and Exchange Commission appointees

• Levitt, Arthur; Paula Dwyer [October 2002]. Take On the Street: What Wall Street and Corporate America Don't Want You to Know. What You Can Do to Fight Back. Random House. ISBN 978-0-375-42178-5 (hardcover); ISBN 978-0-375-71402-3 (trade paperback); ISBN 978-0-553-75694-4 (abridged audio CD). 

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

Notes

1. ^ Congress and the Accounting Wars. Bigger Than Enron. FRONTLINE. Retrieved on 2006-10-15. Containing excerpts from FRONTLINE's interviews.

v • d • e Chairmen of the United States Securities and Exchange Commission
Kennedy • Landis • Douglas • Frank • Eicher • Purcell • Caffrey • Hanrahan • McDonald • D Cook • Demmler • Armstrong • Gadsby • Cary • Cohen • Budge • Casey • B Cook • Garrett • Hills • Williams • Shad • Ruder • Breeden • Levitt • Pitt • Donaldson • Cox