Former SEC chairman speaks at UM about investors’ rights
On Wednesday afternoon, Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission [SEC], spoke in the Storer Auditorium at the UM School of Business.
Levitt first became a broker in 1963.
“I’ve had kind of a screwy career,” Levitt said during his speech.
He graduated from college with a drama degree and was employed by the Air Force and by Life Magazine before he took on a more interesting job – selling cows in Kansas City.
Five years later, his friend told him: “Arthur, if you can sell cows, chances are you can sell stock.”
This idea materialized into a firm, known today as Citigroup.
Previously, Levitt was also the chair of the American Stock Exchange. Currently he is a private advisor to several firms.
Between 1993 and 2001, as the 25th chairperson of the SEC (appointed by President Bill Clinton and replaced by Harvey Pitt, the appointment for George W. Bush), Levitt primarily dedicated his temporary bureaucracy to investor protection and helped to create the Department of Investor Education and Assistance.
He also fought for the strengthened independence of auditors and the founding of a website to provide very accurate corporate information.
“The eight years I spent in Washington were by far and away the most amazing of my life,” Levitt said. “My job at the SEC was to keep our markets fair, as fair as possible, and it’s my belief that investor confidence makes our market special.”
Levitt provided some commentary concerning recent corporate scandals, such as that involving Enron and its auditing/consulting firm, Arthur Anderson.
Levitt, in his stay as chair of the SEC, warned often of the declining quality of financial reporting and monitoring, and the widespread conflicts of interest among those who were supposed to account for the dollars of a company.
He reproached Congress for its failure to establish legislation to prevent and prohibit this auditing/consulting conflict, a failure that continues somewhat to this day.
“On which side is the auditor going to come down when money is on the line: will he favor the interests of management, or the interests of shareholders?” Levitt said. “I think the answer’s obvious.”
“There is no such thing as a totally efficient market,” Levitt added. “There will always be corporate fraud.”
His best solution is increased investor education, rather than more stringently enforced rules and regulations.
“Investing today is a more sure action than any time in the last 15 years,” Levitt said. “We are rapidly approaching a globalized electronic market. In addition, the American market is in the midst of a process of self-cleansing.”
After the lecture, Levitt provided free, autographed copies of his recent book, Take on the Street: What Wall Street and Corporate America Don’t Want You to Know; What You Can Do to Fight Back, to any student with a valid ‘Cane Card.
In his book, Levitt encourages the common investor to fight for power and influence.
“I believe the most potentially powerful lobby in America-the investors-are totally impotent,” Levitt said. “I believe the right of individuals to sue is the cornerstone of investor protection.”
Sam Lockhart can be contacted at s.lockhart1@miami.edu.