Former SEC Chairman Arthur Levitt lambastes the Street.

In the wake of former Securities and Exchange Commission Chairman Harvey Pitt's embarrassingly brief tenure regulating the nation's securities markets, it has become fashionable to lionize and eulogize his predecessor, Arthur Levitt, who held the position longer than any one else. But while Levitt may look like the regulator from Olympus next to the portly Pitt, the one-time Wall Street broker who got his start selling cattle futures more than 40 years ago wasn't always as effective as many now believe.

Good thing Levitt's book has an extensive index. That's because the high and mighty of Wall Street and Capitol Hill will want to find out immediately how badly this respected former chairman of the Securities and Exchange Commission has skewered them. And the angry Levitt does hammer the big shots of the securities business, along with the pols who he charges are their enablers.

Levitt's anger-and the usually suave chairman doesn't look like a happy camper on the book jacket-goes back through a career in public service and the securities industry of more than four decades. It is actually a family matter. Levitt's father's was a longtime controller of the state of New York, a Republican liberal with a spotless record. But that, fumes Levitt, didn't stop one prominent Big Apple politico from roughing him up during the city's persistent fiscal woes in the mid and late 1970s.

New York City Mayor Ed Koch, Levitt writes, in 1978 demanded his father use state pension funds to save the city from yet another potential fiscal crisis that the city seems to go through at least once every 20 years. Levitt's father refused Koch's demand. The mayor didn't think that was the right answer. Mayor Koch, Levitt recounts, screamed that, if the city went bankrupt, the responsibility would be the controller's. (Why is it never the fault of elected officials? This is something that no one has ever explained to the groaning taxpayers. Levitt, whose forte seems to be sniffing out accounting and securities flim flams, never says anything about that either. But he does complain that his father was abused.)

"This confrontation upset my father so much that, moments later, he suffered a minor stroke, which left him unable to speak for several hours," writes Levitt, who uses the book to set many scores straight. Luckily, Levitt's dad recovered. But the incident obviously left young Levitt with a scar. He was learning a painful lesson: Politicians, especially when money and power are at stake, are not nice people. Levitt is just warming up at this point in the book.

This-and Levitt's feral frankness-has made this book a page-turner on Wall Street. Levitt names some of the biggest names in the business. Among those bloodied are Nasdaq's Hardwick Simmons, Merrill's Dan Tully and Citigroup's Sandy Weill. Weill and Levitt were partners in a brokerage firm in the 1960s. Levitt believes many of the laws that regulate these firms were and, in many cases, remain a joke, and that the average retail investor is rooked. For example, Levitt railed against various practices in the 1970s in a speech called "Profits and Professionalism."

In the speech, Levitt asked, "How can a broker view himself as a professional-as a counselor who considers his client's interest before his own-when his livelihood is dependent upon him taking an action which may not be appropriate or timely to take?" Levitt's speech drew much criticism, especially from his partners at his firm.

"This is ridiculous. I can't stop you from doing this, but I certainly don't agree," Levitt quotes Weill, then his partner. Simmons, at that time the firm's marketing manager, tells Levitt that he doesn't understand the business.

Levitt obviously smarts from this incident and one wonders what he thinks of Weill's current predicament. So some two decades later, as SEC chairman, he set out to transform the securities industry with a report that he hoped would expose its inherent conflicts of interest and lead to a miraculous transformation. Unfortunately, as with many reformers who think their reports and their administrations can changes decades of customs and traditions with a few strokes of the pen, Levitt found that this industry can't be changed overnight.

Levitt viewed his report was a landmark achievement. He says the industry finally documented and acknowledged the conflicts of interest in selling products that it originated.

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