Spitzer, Eliot

▪ 2005

      In 2004 Eliot Spitzer, the crusading New York state attorney general, continued to venture where few others dared to tread with his investigation of suspected malfeasance in the upper echelons of the American financial industry. After earlier probes had led to reforms in the banking industry, in 2004 he took on mutual-fund companies and insurance brokerages, where he also found questionable business practices. In the fall of 2003, Spitzer first began his study of improper trading within mutual-fund companies, citing several firms for illegal after-hours trades. His investigations yielded their largest settlement in May 2004 when CEO Richard Strong and the Wisconsin-based company he founded, Strong Capital Management, agreed to pay $60 million and $80 million, respectively, in addition to other penalties for unacceptable methods such as market timing, or short-term and rapid trades. While some industry watchers dismissed Spitzer's high-profile accusations as grandstanding, they nonetheless closely monitored his activities to see where he would strike next. Others heralded his investigations as aggressive attempts to clean up an industry beset by corporate scandals.

      Just days after the Strong settlement, Spitzer filed a civil lawsuit against Richard Grasso, former chairman of the New York Stock Exchange (NYSE), claiming that Grasso had misled the NYSE about the specifics of his extraordinary compensation in salary. A few weeks later Spitzer served subpoenas to the nation's leading insurance companies in pursuit of insurance brokers who he claimed were profiting at the expense of the corporate employees they were hired to serve. Other issues Spitzer pursued through his office in 2004 were labour rights and consumer protections against such abuses as improper billings, fraudulent advertising, and identity theft. He also sought to punish corporate polluters and reform the lax government regulators of such polluters.

      Spitzer was born on June 10, 1959, into a well-to-do household in the Riverdale section of the Bronx, N.Y. He was educated at Princeton University (B.A., 1981) and Harvard Law School (J.D., 1984), where he was an editor of the Harvard Law Review. After graduation he served as a clerk to a judge and an associate at a law firm before leaving to become assistant district attorney (1986–92) in Manhattan, where he prosecuted notorious mobsters. He made a run for New York attorney general in 1994 that was unsuccessful, but on his second attempt, in 1998, he won narrowly. He was reelected in 2002 after his yearlong headline-grabbing investigation of wrongdoing at investment banks—most notably at Merrill Lynch, the world's largest brokerage company—led to huge cash settlements and new rules on greater segregation between the research and investment divisions of a bank. In December 2004 Spitzer made a public announcement regarding his future political plans, confirming what many observers had long suspected—that he would run for New York state governor after the conclusion of his term as attorney general in 2006.

Tom Michael

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▪ American lawyer and politician

born June 10, 1959, Bronx, N.Y., U.S.

 

 American lawyer and politician who was governor of New York from 2007 to 2008. As the state's attorney general (1999–2006), he gained national attention for his aggressive pursuit of corruption in the financial industry.

      Spitzer was educated at Princeton University (B.A., 1981) and Harvard Law School (J.D., 1984), where he was an editor of the Harvard Law Review. After graduation he served as a clerk to a judge and as an associate at a law firm before leaving to become assistant district attorney (1986–92) in Manhattan, where he prosecuted notorious mobsters. He made an unsuccessful run for New York attorney general in 1994, but on his second attempt, in 1998, he narrowly won. In 2002 he was reelected after his yearlong headline-grabbing investigation of wrongdoing at investment banks—most notably at Merrill Lynch, the world's largest brokerage company—led to huge cash settlements and to new rules on greater segregation between the research and investment divisions of a bank.

      In the fall of 2003, Spitzer began studying improper trading within mutual-fund companies, citing several firms for illegal after-hours trades. His investigations yielded their largest settlement in May 2004, when CEO Richard Strong and the Wisconsin-based company he founded, Strong Capital Management, agreed to pay fines of $60 million and $80 million, respectively, in addition to other penalties for unacceptable methods such as market timing, or short-term and rapid trades. His investigations into the financial industry earned him the nickname “the sheriff of Wall Street.” While some industry watchers dismissed Spitzer's high-profile accusations as grandstanding, others heralded his investigations as aggressive attempts to clean up an industry beset by corporate scandals. Other issues Spitzer pursued while attorney general were labour rights and consumer protections against such abuses as improper billings, fraudulent advertising, and identity theft. He also sought to punish corporate polluters and to reform the lax government regulators of such polluters.

      In December 2004 Spitzer announced that he would run for New York state governor after the conclusion of his term as attorney general in 2006. Promising to reform state politics, Spitzer won a landslide victory. Soon after taking office in 2007, however, he saw his popularity decline. He frequently clashed with the state legislature and had several highly publicized confrontations with other politicians. In September 2007 Spitzer unveiled a controversial plan to allow illegal immigrants to receive driver's licenses. Several months later, however, he withdrew the proposal after nationwide opposition. In March 2008 it was revealed that Spitzer was being investigated for his alleged involvement with a prostitution ring. Days later he announced his resignation, effective March 17.

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