NEW YORK ¾
The New York attorney general compared last years research scandal in the banking sector to his ongoing probe into the mutual fund industry, saying that the former was an issue of the rules being wrong, while the latter was more a case of rules being violated.
Speaking of the investigation into research transgressions that misled investors, Spitzer said his office "stumbled upon an entire business model [that] was flawed."
It became a case in which rather than prosecuting a bevy of individuals, his office and the
But he argued that the mutual fund scandal, which involves the forbidden practice of market timing and the outright illegal practice of late trading, is a different matter. "Those who broke these rules understood they were breaking rules and deserve to be punished," he said.
In a short yet direct 15-minute speech, Spitzer also kidded that because of the scandal, the treatment he gets from the financial industry lawyers is warmer than it has ever been.
"The best reception I get is from the white collar bar, Spitzer said. "As long as their clients aren't there, they love me," he said."
Spitzer entered the standing-room-only meeting at the New York Marriott Marquis with a wide smile on his face, shaking hands with lawyers sitting at their luncheon tables and even picking up a copy of State Bar News with his picture on the front of it before beginning his speech. He said he was surprised with the large turnout for just one small part of the 127 th annual New York State Bar Association Meeting.
Spitzer also commended members of the bar for both their affirmations and criticisms of his offices work. "The only way to improve the quality of an office is to know where youve failed," he said.
In a short press conference after the speech, Spitzer would not comment on recent allegations that
Responding to a question about critics who say he is overstepping his duties by trying to lower mutual fund fees, Spitzer responded, "I am not saying that I want fees to be cut. I want the market to set fees." He said a firms main job should be to "get the best deal they can for their investors."
His only comment on a recent decision to lower fees by maligned fund giant
Tuesday in Washington, Spitzer had told Congress that Putnams advisory fees, which cost individual investors 40% more than their institutional investor in 2002, totaled $290 million. Critics, including
But while his office goes through its current stage of the fund probe, or the "digging" phase as Spitzer put it, for the most part, "companies are cooperating," he said.
