Eliot Spitzer's legacy

One of the most tragic outcomes of the Spitzer scandal is the tarnishing of his legacy as New York's attorney general. It's sad that the current state of politics is such that a man's private failings are considered sufficient reason to ignore their public victories. To get a sense of what I mean, here's a quote from Portfolio.com's Odd Numbers blog.

Out of 20 S.E.C. settlements for market timing by mutual funds, 16 involved Spitzer when he was New York's attorney general.

The percentage of illegally-gotten money that mutual funds had to give back in the Spitzer cases was 80 percent -- almost full restitution.

In the 4 settlements not involving Spitzer, the S.E.C. settled for 7 percent.

Why the gap?

Part of it was Spitzer's aggressiveness, but the other factor was that younger S.E.C. officials usually go work at the firms they're in charge of regulating. So, the incentive to bring the hammer is, ummm, somewhat compromised.

Such a shame.


  1. Swankadank said...

    If you haven't heard of him, you should google Bill Lerach. He and his former firm made a highly profitable living filing (and quickly settling for pennies on the dollar) class action and derivative suits against companies.

    A short while ago, he got sentenced to two years in prison for paying kick-backs to shareholders who agreed to be lead-plaintiffs in those cases. Meanwhile, they'd negotiate for themselves sizable chunks of the settlement as attorney's fees.  


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