Critics Question Legacy of Spitzer’s Investigation

Few arrests and questionable reforms make some wonder of New York Attorney General Eliot Spitzer accomplished anything at all.
Despite Spitzer’s tough talk, which included promises to arrest the criminals who orchestrated the widely publicized mutual fund scandals, there have been relatively few arrests this year of white collar criminals, TheStreet.com reports. So far this year, the A.G. has only notched eight names to his list of arrests in connection with far-reaching scandals that have tarnished dozens of mutual funds.
Expectations for more arrests were raised earlier this year when Spitzer collared investment banker Paul Flynn for providing hedge funds with funds that were used for improper trading. But efforts to hold more individuals accountable for improper actions that harmed thousands of mutual fund shareholders have since fizzled and executives who turned a blind eye on good corporate governance are undoubtedly breathing a sigh of relief at the subsequent lack of momentum.
History may yet prove that the fiery investigation ultimately proved to be a tempest in a teapot. Despite the flurry of indictments from Spitzer's office, the mutual fund industry continues to soak up assets, and experts are still debating whether average mutual fund investors actually suffered financial losses.
Despite criticism arguing that Spitzer's clean-up campaign merely rearranged the deck chairs on the Titanic without bringing the industry to heel, the attorney general can point to a number of clear-cut successes. His efforts resulted in $2.4 billion of fines and ultimately embarrassed the Securities and Exchange Commission into taking action by issuing new consumer protection guidelines. In addition, shell-shocked investors withdrew $24.4 billion from funds linked to the scandals during the first three months of his investigation.