Now that headline writers refer to eliot spitzer with comic-book-hero honorifics like "the Enforcer" or "Sheriff of Wall Street," it's worth remembering that when the New York State attorney general began his breakthrough investigation of Merrill Lynch in 2001, he wasn't sure what he was doing. A general suspicion about the veracity of investment bankers' advisories had prompted Spitzer to launch a bit of a fishing expedition into Merrill's records. It wasn't turning up much, however, until early 2002, when Eric Dinallo, Spitzer's top aide on the project, came into his office and showed him a blue binder full of e-mail he had compiled that suggested Merrill's analysts had downgraded an Internet company, GoTo.com because it hadn't given Merrill its investment-banking business. Spitzer scanned the pages and realized that, with this e-mail, Dinallo was hitting pay dirt. "Get them all," he said.
Wall Street would never be the same. Spitzer opened an investigation that in just a few months began fundamentally reshaping America's financial markets. Analysts, Spitzer would show, were doctoring their reports--which the public relies on for stock information--to win business for their banks' investment arms or to downgrade companies that didn't play ball. Insiders knew the scam; folks in the heartland had no idea. Spitzer's aggressive pursuit of Merrill Lynch and, subsequently, a dozen other Wall Street firms turned the tables. The new ethics he championed are touching in their simplicity: analysts' ratings should reflect what they actually believe. There has not been such an affirmation of what's right since Moses and the Ten Commandments. "The system was rotten, and no one seemed interested in fixing it," says Spitzer. "So we moved in."
For many Americans, 2002 will go down in history as the year corporations failed them. Story after incredible story of greed and wrongdoing has created an array of new bogeymen: Tyco's Dennis Kozlowski (31 felony counts), Enron's Andrew Fastow (indicted for wire fraud, money laundering and conspiracy), ImClone's Sam Waksal (insider trading). Politicians have huffed and chuffed about how to fix the system, but legislation proposed to date is likely to lack teeth. The Bush Administration responded late to the public's sense of outrage, then seemed to lose focus. In the end, the only man who appeared to be serious about cleaning up the rot was Spitzer, 43, a relatively unknown state official armed with the law, a streak of fearlessness and boxes full of incriminating e-mail.
Spitzer has spent a career pushing the law as a tool for social change. A passionate and partisan Democrat, he has brought cases against a long line of tough adversaries--organized crime, gun manufacturers, air polluters, Korean grocers who don't pay minimum wage. His efforts have not always succeeded. Yet he has consistently used laws in novel ways to address wrongs that were in plain view but seemed intractable to others. And, as was the case with Merrill, his endeavors have been about pursuing a path of justice even before the precise nature of a case is clear. "He's the real deal," says Alan Dershowitz, a Harvard Law School professor who hired Spitzer, in his second year at the school, as a research assistant in the 1980s to help on the Claus von Bulow defense. "He has a creative and innovative mind, and he always wants to do what's right."