Meaning: Arthur Levitt, a former chairman of the U.S. Securities and Exchange Commission (SEC), made this statement in the context of the corporate scandals that rocked the early 2000s. Enron and WorldCom were two prominent cases that involved massive accounting fraud and led to their bankruptcies, causing significant financial losses for investors and employees. Levitt's quote reflects his belief that these scandals were not solely the result of corporate misconduct, but also a consequence of investors' failure to discern the true value of the companies in question.

In this quote, Levitt highlights the issue of investors being lured by the appearance of high returns without fully understanding the underlying fundamentals of the companies they are investing in. The phrase "selling for a thousand times nothing" suggests that some companies were trading at inflated prices relative to their actual worth. This phenomenon can be attributed to market speculation, irrational exuberance, and the lack of proper due diligence by investors.

The mention of "chances are they may be worth only that" underscores the notion that seemingly lucrative investment opportunities may, in reality, be devoid of substantial value. Levitt suggests that investors were overlooking warning signs and blindly pouring money into companies without critically assessing their financial health, governance practices, and sustainability.

The failures of Enron and WorldCom serve as cautionary tales, highlighting the importance of transparency, accountability, and ethical conduct in corporate governance. These scandals exposed weaknesses in regulatory oversight, financial reporting standards, and the integrity of corporate leadership. Levitt's quote serves as a reminder that investors play a crucial role in holding companies accountable and should not be swayed by superficial appearances or speculative market trends.

The role of regulatory bodies such as the SEC is also implicit in Levitt's statement. As a former chairman of the SEC, he likely aimed to emphasize the need for robust regulatory measures to protect investors and maintain the integrity of the financial markets. The SEC plays a vital role in enforcing securities laws, overseeing corporate disclosures, and safeguarding the interests of investors. Levitt's quote underscores the importance of regulatory vigilance and the need for effective enforcement to prevent future instances of corporate malfeasance.

Furthermore, Levitt's emphasis on "failures of investors" reflects the broader issue of financial literacy and investor education. Many investors may have been ill-equipped to assess the complexities of financial statements, corporate governance practices, and risk factors. The quote underscores the need for investors to cultivate a deeper understanding of the companies they invest in, conduct thorough research, and exercise prudence in their investment decisions.

In conclusion, Arthur Levitt's quote encapsulates the multifaceted nature of the corporate scandals that shook the financial world in the early 2000s. It sheds light on the intertwined responsibilities of investors, regulatory bodies, and corporate entities in upholding transparency, accountability, and ethical behavior. The quote serves as a poignant reminder of the consequences of overlooking warning signs and the imperative for investors to exercise diligence and critical judgment in their investment endeavors.