Departing Levitt Called Success as SEC Chairman

Updated from 12:14 p.m. ET

Securities and Exchange Commission Chairman Arthur Levitt announced Wednesday that he would step down as the nation's top securities regulator after serving longer than anyone else in the high-profile post.

"While I look forward to my return to private life and the beginning of new challenges, this is a day I knew would come, but long have dreaded," Levitt said as he announced his departure. "For the last almost eight years, I've had my dream job."

The retirement was widely expected, particularly after George W. Bush won the tortuous presidential election. Bush is considered less likely to favor aggressive regulation of Wall Street, a posture Levitt increasingly took during his final years on the commission. He said he would leave by mid-February, when he turns 70.

Levitt was appointed chairman by President Clinton in July 1993 and named to a second five-year term in 1998. Earlier, he had been chairman of the American Stock Exchange, chairman of the New York Economic Development Authority and owner of the Washington newspaper Roll Call.

President-elect Bush will nominate the SEC's next chairman, and the choice will require Senatorial approval. Among those mentioned in early speculation is James Doty, a lawyer with the Washington powerhouse law firm Baker Botts.

John Coffee, a securities markets expert and law professor at Columbia University in New York, also suggested Bush might tap current SEC Commissioner Laura Unger, the only Republican on the five-member commission, to fill the top job on an acting basis while the search for a permanent replacement continues. The commission is by law bipartisan and one GOP seat is vacant.

Coffee praised Levitt for his efforts to halt price collusion on the Nasdaq in the late 1990s and his push for greater financial disclosure to investors through such initiatives as Regulation FD, which effectively prevents the early release of corporate information to analysts and Wall Street insiders.

"You have to give some recognition that Arthur Levitt is certainly one of the most successful SEC chairmen ever," Coffee said.

But Coffee said Levitt fell short on some initiatives, such as his efforts to rein in the accounting industry.

Levitt spent much of this year railing against the auditing industry for creating potential conflicts of interest. In the end, however, the SEC adopted new auditor independence rules that stepped back considerably from Levitt's initial proposal to ban accounting firms from serving as both auditors and consultants to the same clients.

Levitt often portrayed himself as a friend of individual investors, with his town hall type addresses to audiences of mom-and-pop shareholders across the country. But he dropped the ball on some important issues for small investors, said Mark Maddox, an Indiana securities lawyer and former president of thePublic Investors Arbitration Bar Association, an investor trade and lobbying organization.

The SEC under Levitt's watch did too little to help investors recoup losses stemming from fraud involving small microcap companies, Maddox said.

It also should have reformed the Securities Investor Protection Corp., he said. SIPC was set up to cover massive losses because of brokerage failures, much like the Federal Deposit Insurance Corp. was established as an insurance fund for bank failures. But Maddox and the association have argued SIPC has guarded its pool of money at the expense of investors who suffered losses when their brokerages went under.

Maddox sees little hope for little investors with the Bush presidency. "I'm very confident that the new president will pick a new SEC chairman who is Wall Street friendly," he said. "Investors and their interests will be routinely passed over."

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