SEC chairman Arthur Levitt Jr. says he is preparing to use the bully pulpit of his office to advocate increased hiring of minorities and women at major securities firms and will soon release a policy statement on the subject.
In an interview with The Bond Buyer last Thursday, Levitt, chairman of the Securities and Exchange Commission since July 1993, said that he is planning to release a "specific initiative" in about 30 days regarding a proposal to better integrate the Wall Street workforce.
"I think that the financial sector has got to do a better job in including minorities and women in all employment levels," said Levitt, who has spoken on the issue before.
"While the commission does not have the ability to regulate civil rights issues, we certainly have the ear of investors and Wall Street, and we intend to use our influence. I speak not just for myself but other commissioners."
The remarks come at a difficult time for Levitt, who has taken heat from minority- and woman-owned bond firms for his endorsement of campaign contribution restrictions imposed by the Municipal Securities Rulemaking Board.
The U.S. Commission on Civil Rights will begin hearings today on race and sexual discrimination. Although not formally on the commission's agenda, the impact that the contribution restrictions are having on minority- and woman-owned firms is likely to be discussed.
In fact, Alphonso E. Tindall Jr., chairman of the National Association of Securities Professionals, a trade organization that represents woman- and minority-owned firms, said he believes Levitt's statements on diversity are linked to the commission's hearings.
Tindall will testify at a hearing session on Wednesday regarding equal opportunities for minorities in the finance industry, and said he will discuss how NASP believes that the recently enacted MSRB contributions rule, G-37, disproportionally harms women and minorities.
At the same time, Wall Street executives, all of whom would speak only on a not-for-attribution basis, say they have made efforts to recruit women and minorities but face a difficult task in addressing Levitt's concerns.
Executives at several major firms say their firms have established committees that scour college campuses for minorities and women. They said a major impediment to recruiting women and minorities are the set-aside programs established by most municipalities.
The programs direct bond business and pension fund business to womanand minority-owned firms, making it more profitable for women and minorities to start their own firms, rather than work at a Wall Street investment house, several executives say.
Last March, Levitt said in a speech at the annual meeting of the Public Securities Association that municipal bond underwriters should begin including woman-owned and minorityowned firms in competitive underwriting syndicates.
Following the speech, Levitt told reporters that minorities have not been "adequately integrated into the fabric of" the investment community.
Levitt said that the absence of minorities and women is especially pronounced in non-municipal areas of the securities industry, which he said would be noted in the forthcoming policy statement.
"The sad truth is that there is only sparse participation of minority groups and women, particularly minority groups in the senior levels of the securities business," he said. "I will work with those in leadership positions in Washington and Wall Street to try to find solutions."
Levitt's initiative is not likely to squelch criticism from woman and minority-owned firms of the contribution rule.
Executives from these firms have argued that unlike larger, strongly capitalized Wall Street institutions. minority-owned firms need to maintain their political links in order to compete effectively.
In addition, executives from minority- and woman-owned firms say they are being deprived of the First Amendment rights of free speech, a fight they say that helps them finance the political campaigns of candidates who support diversity and other policies they favor.
"I haven't talked to Arthur Levitt since I saw him eight to 10 months ago," NASP's Tindall said. "We are not being asked to sit at the table at any level."
Sharon L. King contributed to this article.
