Wall Street's Top Cop
	In a year when business let so many down, Eliot Spitzer fought back. How a rich kid from the Bronx became the people's champion
	By Adi Ignatius

Posted Sunday, December 22, 2002; 4:31 a.m. EST
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."

Spitzer's gift is a plain-talking sensibility. He was a brilliant student and a star athlete, but he doesn't connect emotionally with people or ooze charisma like a Bill Clinton. He is attractive, though not in a classic way. His strikingly deep-set eyes underscore his drive and intensity. And his pronounced chin once moved the New York Times to comment, "His jaw actually juts." Spitzer has a cheeky sense of humor. (At the Institutional Investor magazine awards dinner for market analysts in November, he opened his speech by saying, "It is wonderful to be here this evening, because I really want to put faces to all those e-mails.") His competitive streak makes him a formidable foe. "Debating with Eliot Spitzer is like wrestling with a grizzly bear," says William Taylor, an old friend and founding editor of Fast Company. "You don't hope to win, just to get out alive."

To many Americans, Spitzer in 2002 personified integrity and trust. After the Internet boom blew out and their stock and 401(k) holdings evaporated, it was nice to find someone—anyone—who seemed to be fighting on their behalf. By taking on Wall Street, Spitzer clearly touched a chord. At the exclusive University Club in midtown Manhattan, under tall marble columns resembling those of an Italian palazzo, a well- dressed gentleman walks through a crowd toward Spitzer just to say, "Keep it up, Eliot!" Later, outside the attorney general's office near Wall Street, a young man crossing the street recognizes Spitzer and calls out, "Don't give up the fight!" Upstate, in Rochester, after Spitzer delivers a speech to local Rotarians, Bob Maney, a stockbroker at Prudential Financial (and a Republican to boot), says, "He's pushing the right buttons."

The rap on Spitzer is that he's ambitious, that he has his eye on a bigger prize. To his (off-the-record) critics on Wall Street, his pursuit of investment banks smacks of opportunism and grandstanding, of a public official out of control. "This could have been handled more effectively away from the glare of the press," says a senior executive at one of the banks Spitzer has gone after. But if this is all a political ploy, a platform from which to run someday for, say, Governor of New York, it's certainly not in most politicians' playbooks to take on the moneymen who rank among the most powerful people in the U.S.—and whom he might need one day to help finance a campaign. Spitzer, a child of privilege who attended Horace Mann School in the Riverdale section of the Bronx, N.Y., Princeton and then Harvard Law, has studied or socialized with a lot of these Wall Street types. "I have friends in the industry who think I'm doing the wrong thing," Spitzer says. James Cramer, an old friend who does market commentary for TheStreet.com and other media, is blunter: "Everybody on Wall Street hates this guy."

1 | 2 | 3 | 4 | Next >>

Get the Magazine — Try 4 Issues Free!

Disconnected: Deceit and Betrayal at WorldCom By Lynne W. Jeter Price: $19.96

	PHOTO ESSAY People Who Mattered in 2002 A general, a bishop, a bride and a groom: just a few of the other men and women who made news this year NOTEBOOK In Memoriam From a baseball legend to the madame of manners, TIME pays tribute to those who died this year ENTERTAINMENT Best & Worst 2002 TIME picks the best and worst movies, books, music and more BUSINESS 2002 Global Influentials TIME profiles 15 up-and-coming business executives around the globe