Little Guy Is Losing an SEC Friend

Small investors will be losing a friend in a high place when Arthur Levitt steps down as chairman of the Securities and Exchange Commission early next year. Levitt turned his eight-year tenure as chairman--the longest in the SEC’s 66-year history--into a mission on behalf of small stockholders, often taking on the powerful interests of the stock exchanges, brokers and accounting firms.

The agency under Levitt favored self-regulation but fought hard and often in Congress to defend its rules. It put fraudulent dealers in jail, went after Internet scams and set up a special unit to investigate accounting fraud.

To maintain public confidence in the markets, Levitt forced companies to beef up financial reporting and, to improve price transparency, forced dealers to give all investors access to the best price quotes from their institutional investors, stimulating competition.

In what Levitt considers his crowning achievement, the SEC forbade companies to share sensitive information about their performance with only a select group of Wall Street analysts. Now the public, largely through the media, gets the news as well.

Levitt tried to educate the public by holding more than 40 “town hall” meetings across the country. For his unflagging support of the individual investor, he earned praise from consumers, grudging respect on Wall Street and some enemies in the Republican Congress. President-elect George W. Bush should look for a successor in Levitt’s independent mold to lead the SEC.