SEC Chairman Christopher Cox deserves much of the blame for the downturn in investor confidence that has been undermining stock-market returns. That was the charge leveled by Arthur Levitt Jr. — who held the post during the Clinton administration — during Oct. 16 hearings before the Senate Banking Committee.
“Recently, at critical moments and on critical issues, the SEC has been reactive at best or has shown no real willingness to stand up for investors, and it’s these moments that weaken the power of the agency and investors’ faith in the markets,” testified Mr. Levitt, who is now a senior adviser to The Carlyle Group, a Washington-based private equity firm.
“A lack of transparency, a lack of enforcement, and a lack of resources all played key roles,” continued Mr. Levitt, who has endorsed the presidential campaign of Sen. Barack Obama, D-Ill.
John Nester, an SEC spokesman, said Mr. Cox had no comment on Mr. Levitt’s testimony. But according to figures Mr. Cox provided to the Senate committee, the SEC has taken an average of 615 enforcement actions per year since August 2005, when Mr. Cox took over as agency chairman, assessing average financial penalties and disgorgements of $2.48 billion per year. During Mr. Levitt’s tenure from July 1993 to February 2001, the agency took an average of 490 enforcement actions a year, assessing average annual penalties and disgorgements of $608 million.
