Arthur Levitt 1993-2001
Arthur Levitt, the 25th Chairman of the SEC, holds the record for the longest tenure at the helm of the regulator, where he remained for the bulk of President Bill Clinton's presidency.
When Levitt came to the SEC, the Financial Accounting Standards Board (FASB) had proposed requiring companies to record stock options on their income statements, which was opposed by many in business community and financial industry. Levitt eventually urged the FASB not to go ahead with the rule proposal. He later said this "was probably the single biggest mistake I made in my years at the SEC."
Some of the most positive hallmarks of his tenure include improving the quality of the financial reporting process, maintaining the independence of auditors, reducing spreads in the Nasdaq market which is said to have saved investors billions of dollars, requiring that important information be released to all investors simultaneously, fighting Internet fraud, and cleaning up the municipal bond market.
While he was criticized for not pushing for tougher accounting rules, in September 1998, he gave a now famous speech called the "Numbers Game'' at New York University, where he spoke about gaps in the "system of gatekeepers" -- more than three years before Enron imploded.
In that speech, he expressed deep concern about "earnings management'' -- the manipulation of accounting in order to meet Wall Street's earnings expectations.
"Too many corporate managers, auditors and analysts are participating in a game of nods and winks,'' he warned. "I fear that we are witnessing an erosion in the quality of earnings, and therefore, the quality of financial reporting. Managing may be giving way to manipulation; Integrity may be losing out to illusion.''
In the conclusion to his speech, Levitt asked the ominous question: "Today, American markets enjoy the confidence of the world. How many half-truths, and how much accounting sleight-of-hand, will it take to tarnish that faith?''
More recently, Levitt has come under criticism for not uncovering Bernard Madoff's Ponzi scheme.
