January 2001

Levitt Resigns as SEC Chair

WASHINGTON—Securities and Exchange Commission Chairman Arthur Levitt announced in December that he will step down as chair before February 2001. Chairman Levitt will leave without completing his second five-year term, which would have ended in 2003.

“I’ll miss meeting someone coming up to me with an idea on how we can get more meaningful disclosure; on how we can help investors help themselves to get a better price or better advice; on how we can make our markets fairer, our accounting practices stronger, our financial products more transparent,” said Levitt in remarks delivered to his staff on the day he announced his retirement.

The CPA community received Levitt’s announcement with mixed reactions. Brian Caswell, head of Caswell & Associates and chair of the New York State Society of CPAs Accounting and Auditing Oversight Committee, said the announcement was a surprise to him.

Others in the accounting community said they had heard rumors of Levitt’s imminent departure months before the formal announcement was made.

“[Levitt] seemed to indicate over the past six months or so that if a Democrat was not elected as U.S. president, he would be gone,” said Robert Waxman, a sole practitioner in New York City and chair of the NYSSCPA’s SEC Practice Committee.

Levitt’s action is consistent with the general practice of SEC chairs resigning from their position when a member of the opposing political party is elected president.

After Levitt’s announcement, friends and associates came forward to praise him for championing the cause of the individual investor. Under Levitt’s stewardship, prospectuses were required to be written in “plain English” so investors could make independent and informed decisions.

Former President Clinton praised Levitt as a “true champion of the individual investor,” working to put more information in the hands of individual investors and making financial information accessible to everyone.

Securities Industry Association President Marc Lackritz called Levitt “a diligent watchdog for the individual investor.’’

“He had, over time, become my personal hero because he was an activist,” Waxman said. “He started to fix things that needed to be fixed. He will be missed.”

Rooting out fraud on the Internet and ensuring that electronic markets developed in ways that would benefit investors by driving down costs and increasing efficiency was championed by the Commission during Levitt’s tenure.

Levitt’s time at the Commission also coincided with rapidly changing technology, allowing people to make trades from their home computers via the Internet.

One of Levitt’s most notable accomplishments was the passing of the Commission’s revised standards for auditor independence, an action that was preceded by much controversy and sometimes heated argument, especially among the accounting profession.

Before joining the SEC, Levitt owned Roll Call, a newspaper covering Capitol Hill. He has also served as chair of the New York City Economic Development Corp. and chair of the American Stock Exchange (1978–1989), and before that he worked on Wall Street for 16 years.

Levitt, age 69, was the Commission’s longest-serving chair, holding the position for seven and a half years. He did not indicate his plans for the future. His replacement will be nominated by President George W. Bush and confirmed by the U.S. Senate.