Monday, March 10, 2008
This afternoon both the New York Times and the Wall St. Journal reported that Governor Eliot Spitzer had been involved in a prostitution ring, apparently caught in a federal wiretap arranging for the services of a prostitute in Washington D.C. last month. This afternoon Governor Spitzer appeared to confirm these reports as he made a brief public statement in which he apologized to his family and to the public, but also stated that: "I do not believe that politics in the long run is about individuals. It is about ideas, the public good and doing what is best for the State of New York."
Unfortunately, politics is about individuals. The kickback scandals of Milberg Weiss and William Lerach gave corporate defendants a powerful weapon to use against securities fraud class actions, and they have used it with great effectiveness, to argue that the greed of the private securities bar, and not vindication of investors' rights, was the force behind private litigation. Now Governor Spitzer has given corporate America yet another reason to attack the bona fides of those who seek to hold them accountable. While the Governor may assert that his transgressions are moral and personal and have nothing to do with his record of public service, for Wall St. he is the face of the government prosecutor against greed and corruption in the mutual funds and tainted analysis scandals. For years, they have argued that his headline-grabbing investigations were done to further his political career, and to this one could reasonably say so what? However, a crusader's credibility is based, to a great extent, on his personal probity, and his critics are certain to make the most out of this. And who can blame them? Wall St. may be corrupt, but the Governor is immoral.
It's a sad day for investors' advocates.