NYP: SPITZER'S CHOICE -- Scapegoating the small fry

New York Post ^ | April 28, 2005 | BOB BARR

[OESY]

To this former prosecutor and politician, state Attorney General Eliot Spitzer's prosecution of former Bank of America employee Ted Sihpol looks like pure — and ugly — politics.

In his climb up the political ladder, Spitzer is marketing himself as the most aggressive consumer advocate since Ralph Nader. And for an attorney general in the Empire State, only one target can win you that rep: Wall Street....

The only problem, as Spitzer's team quickly discovered, is that top fund managers can field multimillion-dollar teams of legal superstars who can bury him in paper, tie the case up in court for years, and dramatically reduce the odds of convictions....

So, what did Spitzer do? Did he target the wealthy corporate bigwigs who were actually behind the abuses? Did he try to send a message to the investment industry that neither wealth nor power puts one beyond the reach of justice? Resoundingly, no.

He went after the little guy....

The most powerful tool any prosecutor can deploy is prosecutorial discretion — deciding who to prosecute and who not to. For most prosecutors, the world is full of potential targets. Merely walking down the street and indicting every third person would likely yield a fair share of convictions.

But that's not how our system is supposed to work. We entrust prosecutors with vast authority, and hope to Heaven they use that discretion wisely, seeking convictions against the worst offenders.

Regrettably, in our 21st century world of 24-hour news cycles and career candidacies, this discretion is often cast aside in the glare of blind ambition. In such an environment, we get press-release prosecutions, with targets chosen based on their media appeal and their expendability, rather than their true culpability.

In that climate, justice becomes a mere afterthought.

[OESY]

Some other problems: Attacking Wall Street kills jobs in New York state where Spitzer hopes to be governor. It also depresses the price of his "target" companies so investors in 401k plans, mutual funds and pension plans lose millions, thus contributing to the stock market malaise.

[goldstategop]

The Democrats are shaking down Wall Street. Spitzer is warning GOP leaning moguls to shut up if they know what's good for them.

(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)

[Brilliant]

This is Spitzer's alternative to higher taxes. Any competent businessman would say, "I'm outta here."

[Eric in the Ozarks]

Can you say New Joysey ? Yeah, I thought you could.

[Dahoser]

In his climb up the political ladder, Spitzer is marketing himself as the most aggressive consumer advocate since Ralph Nader.

And the dopes here in the People's Republic of New York are going to reward him with the governorship.

[LRoggy]

I'm going to get flamed on this post, but this is the truth. Rudy Gillian did the same thing when he was making his name in the 90's and I have never forgiven him for it. He and his henchmen arrested a 29-year old trader at Goldman (if memory serves) named Timothy Tabor. I was a 29-year old trader myself at the time at Drexel.

Tabor was led off in handcuffs, publicly humiliated, and kept in legal limbo for, I believe, two years, without even being indicted. The kid's career was ruined and he was unable to work for the time he spent under suspicion. I remember thinking, there but for the grace . . .

As Ray Donovan so famously put it when he was exonerated in the Reagan years: "What department do I go to to get my reputation back?" Tabor never did get his back, as it went from a front page story to not even a blurb when cleared.

It is disgusting how far Spitzer is taking this at this point. The extra paperwork I have to go through now to help clients with their investments, the intellectually childish manner the regulators are using to write new regulations, and so on are going to lead to the public getting a reduced level of advice from those of us who have clean SEC/NASD records. All in the name of punishing those that took advantage during the 90's.

And by the way, for those of you that think Martha shouldn't have gone to jail, it is her ilk (funny how elite liberals think the rules don't apply to them) that have led to this too. Elites who think they can game the system always lead to these regulatory pendulums swinging back to extremes.

If Spitzer wants to do some good, instead of solely tearing down, he should be challenged to come up with an effective, positive approach to advising clients properly.

And while he is at it, how about prosecuting the following:

Lawyers who mislead the public with advertisements soliciting law suits against losing money in the market, without telling the client that a dollar loss is not a percentage loss?

Financial journalists who practice the worst form of advice-giving, by trying to sell one-size-fits-all solutions when no two people are alike? (Oh, I'm sorry! Why bite the hand that publicizes you?)

I am not absolving my industry in the reprehensible actions they perpetuated. Until our practitioners place their client's interests before their own, we will never fully gain the respect of the public. Investing is not a game, it is not a rigged market. But we have certainly done our best to make the public conclude that.