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In a year that saw accounting scandals blow through the business world, tarnishing the images of companies and the executives who ran them, few people emerged with their reputations actually enhanced. The most notable exception was New York Attorney General Eliot Spitzer. Many observers perceived a vacuum in securities enforcement even before the resignation of Securities and Exchange Commission Chairman Harvey Pitt. Spitzer sprang into the breach. It was an unexpected move even from a man who has often surprised people who know him well. The attorney general has long been overshadowed in New York’s crowded legal landscape. But Spitzer, concerned that investors were poorly served by analysts whose advice about companies was influenced by the banking fees their employers hoped to earn from those same companies, launched an investigation of some of the largest investment houses on Wall Street. Last May, Merrill Lynch agreed to pay a $100 million fine and to create a wall between research and investment banking. Before it did, Spitzer released a spate of e-mails in which Merrill analysts casually revealed their true feelings about companies they were plugging. At the same time that InfoSpace had Merrill’s highest rating, analysts called it “a powder keg” and “a piece of junk.” The SEC opened its own inquiry, and last week Spitzer and federal regulators negotiated a settlement to resolve suits involving a dozen more Wall Street firms. Spitzer, 43, is widely praised for his efforts to clean up the Street. Republican James Comey, the U.S. Attorney for the Southern District of New York, applauds the Democrat, saying, “I think what he’s doing on Wall Street is terrific.” Not everyone agrees. Spitzer has been criticized for being ambitious and for injecting himself into an arena usually governed by the feds. Richard Baker, a Republican representative from Louisiana, held hearings on analysts’ conflicts beginning in June 2001. He takes umbrage at the suggestion of a “vacuum” in Washington and has threatened legislation that would supercede state rule-making. Defense lawyer Michael Rosen, however, credits Spitzer with putting his office on the map. “Did anyone know there was an attorney general’s office?” asks Rosen, a solo practitioner who represented Thomas Gambino a decade ago when he was prosecuted by Spitzer, then an assistant district attorney. “What did they do, regulate parking tickets or something?” His former adversary has impressed him, Rosen says. “Eliot has tread where others have feared to tread.” For five of his six years in the Manhattan district attorney’s office, Spitzer worked under Michael Cherkasky, who says Spitzer had the same big-picture focus he has now. Even though Gambino copped a plea in mid-trial that allowed him to walk (and Rosen to claim victory), he paid a $12 million fine and agreed to leave the trucking industry. Changing an industry was Spitzer’s goal, Cherkasky says, just as it was in the Merrill case. Cherkasky says he foresaw a bright future for Spitzer but wouldn’t have guessed it was in politics. “I honestly didn’t know he had those aspirations,” he says. “He wasn’t the greatest public speaker. And he’s not a classic glad-hander.” Even his wife was surprised. “I just did not expect that he would ever do that,” says Silda Wall, whom he met at Harvard Law School and married in 1987. His first campaign was the 1994 attorney general race, when the couple had three young daughters. The timing was not ideal, but her husband is a man who acts on his convictions, Wall says, and he had interned in the attorney general’s office. Finishing last in the primary after spending about $4 million of his family fortune left him undeterred. Four years later he was elected, then re-elected last month. Spitzer credits the tobacco litigation brought by state attorneys general with expanding the role of the office. “I’d like to think we’ve contributed to that” with his securities suits, he says. Had the SEC taken on the Street, he adds, “we never would have gone in.”

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