Word: spitzers
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Dates: during 2000-2009
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...investigation began on a shoestring in June 2001, when the attorney general's office, inspired in part by a Wall Street Journal article, issued a subpoena to Merrill asking for documents related to GoTo.com and another Internet company, InfoSpace. Spitzer dusted off the Martin Act, a 1921 New York statute that allows the attorney general's office to launch broad investigations of securities companies. "Martin," Spitzer concedes, "is generous to prosecutors." His interest picked up the following month when he learned that Merrill Lynch had settled promptly and magnanimously with a New York City pediatrician who charged that...
...boxes of e-mail that began arriving in March that made the case. In early spring Spitzer confronted Merrill with the evidence. Merrill complained that they had been taken out of context but appeared willing to settle. What Merrill didn't want was having everything made public. That's where it underestimated Spitzer's resolve. He held out for disclosure and on April 8 filed an investigative action against Merrill. That day he held a press conference and released the most egregious of the e-mail...
They became instant classics. A Merrill research report from Dec. 21, 2000, for example, called an Internet company, LifeMinders, "an attractive investment." But earlier that month, a Blodget e-mail had said, "I can't believe what a POS [piece of s___] that thing is." Spitzer has another favorite--a Blodget missive, now known in the office as the "smoking-gun" document, that says if his team doesn't get any guidance from above, "we are going to just start calling the stocks ... like we see them, no matter what the ancillary business consequences are." Says Spitzer...
With the e-mail public, Merrill felt its reputation was beginning to suffer. It finally agreed to settle, without admitting wrongdoing, on the condition that there be a broad agreement precluding similar suits by other zealous state attorneys general. The deal was pounded out. In the end, Spitzer says, he didn't negotiate the fine. He called Merrill Lynch's lawyers and recalls saying, "It's $100 million. It won't kill you. I want this settled tonight." Merrill agreed to pay the fine, apologize and reform the way it paid its analysts. The public applauded the deal, though Spitzer...
...first shot had been fired. But Spitzer was not done. His office led an effort to subpoena e-mail from a dozen other investment banks. The cases were later parceled out for several other states to pursue: California got Deutsche Bank, for example; Massachusetts got CSFB. The SEC jumped in after the Merrill settlement, and Spitzer and the SEC's director of enforcement, Stephen Cutler, began working on a comprehensive deal to settle all 12 cases at once...