Spitzer spurs lots of crowing
By Al Lewis
Tuesday, March 11, 2008
Anyone who ever sat in Eliot Spitzer's cross hairs can feel
better now, laughing about his dark side.
At the New York Stock Exchange — once a Spitzer target itself —
traders reportedly cheered as news of Spitzer's alleged
indiscretions with a high-dollar prostitution service broke.
"Spitzer's been no friend to Wall Street," said Hank Smith,
chief investment officer of Haverford Investments, a Pennsylvania firm that manages $6.5 billion.
"We're likely to see stocks rally on Tuesday because this news
will kick the subprime mess off the front page."
Don't count on that rally, or even a lull in the subprime news.
But it's a sure bet the man Time magazine called "Crusader of
the Year" will be better remembered as "Client 9" of the
A big no-comment came from Denver-based Janus mutual funds,
which Spitzer accused of trading improprieties in 2004.
But you can bet there is jubilation in the halls.
Spitzer's case against Janus never went to court, and no Janus
official was implicated. But several executives, including
chief executive Mark Whiston, were forced to resign. And
the company paid $226.2 million to settle accusations that in
retrospect seem like parking violations.
Janus officials decided this was cheaper than battling Spitzer
in the national media — potentially losing investors to negative
"All he did was make headlines," said Anthony Accetta, a former
federal prosecutor. "He announced investigations. He
bullied people around. And then he forced settlements that
the consumers — not the companies — had to pay."
It's hard to think of an industry that Spitzer did not target as New York's attorney
general from 1999 to November 2006.
New York law gave him broad powers to sue
investment banks, mutual funds, insurance companies, gun
manufacturers, drugmakers and plenty of companies here in Colorado.
Denver-based Invesco Funds, for instance, paid $451.5 million to
settle Spitzer charges.
In 2003, Qwest founder Philip Anschutz paid $4.4 million and
former Qwest chief executive Joe Nacchio paid $400,000 to settle
Spitzer's claims that they violated
securities laws by receiving shares of stock in exchange for
steering business to the issuers. Anschutz said he did
nothing improper but paid the settlement to get Spitzer off his
Spitzer also dinged Scott Richter, a
e-mail advertiser known as the Spam King, for $50,000, although
Spitzer originally sought $20 million.
Plenty of people deserved what Spitzer threw at them. But
now it's Spitzer's turn to take the hit. And Spitzer
without ethics is like Mr. Clean without the clean.
"It's an attack to the core identity," said Michael Pfarrer, an
assistant professor at the
who studies reputation management. "His salience is
ethical behavior, and he violated it."
In 2005, Spitzer was gracious enough to meet me in his Manhattan office. By that time, he'd
been accused of everything from extortion to aggressively
positioning himself for a gubernatorial race.
"People spend a lot of time challenging my motives," he said.
"But . . . challenging the motive of the prosecutor is the last
refuge of the guilty."
I loved that line. I loved his righteous indignation. I
loved his ability to humiliate powerful wrongdoers.
Too bad he blew it all on a hooker.
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