Sue Eliot Spitzer!

From the entertaining Spitzer Watch blog, a nice crack on the perpetually aggrieved New York attorney general:

The lead editorial in today's Wall $treet Journal makes the point that compared to any alleged mismanagement by former AIG exec Hank Greenberg, Eliot Spitzer has done far more damage to AIG shareholder value.

This begs the question: Why don't AIG shareholders sue Eliot Spitzer?

Spitzer has in public said Mr. Greenberg committed "fraud" that was "illegal" and caused AIG's share price to plummet!

The damage to shareholder value caused by Spitzer's investigation (and PR campaign) was predictable. More importantly, if what the Journal's portrayal* of the "white paper" released by Greenberg's lawyers (lead by David Boies) is accurate, then Spitzer was reckless in making accusations against the former AIG executive.

Whole thing here.

Comments

[Dave W.]

Tell ya what. First we make a habit of giving helpless lil nobodies like Jewel and Hatfill the right to collect on this kinda stuf.

Once that get going on that for a decade or 2, we can decide whether AIG shareholders (read: rich people) really need to share in this new kinda remedy.

[Brian Courts]

AIG shareholders (read: rich people)

I'm sure all the retirees with pension funds invested in AIG and any average worker with mutual fund will be glad to know they're officially rich now.

[David W.]

Brian:

They are not all rich. But the rich ones are the ones in control and the ones who will disproportionately benefit from curbing Spitzer.

[Randolph Carter]

In other news, when wealthier people get tax refunds, they get back more than poor people. C'mon, David W. I'd rather get some benefit and have someone wealthier benefit "disproportionatly" than get no benefit at all.

[independent worm]

If it weren't for him, the SEC would STILL be asleep at the revolving door.

When its YOUR 401k money getting swiped by an amoral Ivy League gangster, its nice to have a public servant actually doing what he's paid to do instead of sitting on his ass and waiting for the inevitable job offer from BigLaw like all the other govt hacks do.

[Brian Courts]

I think we'd all benefit from curbing the politically ambitious self-serving Spitzer so I'm not too concerned if the rich benefit disproportionately. They pay taxes disproportionately too, but that doesn't seem to bother you.

[Brian Courts]

an amoral Ivy League gangster

Which one? Spitzer or the AIG guy?

[joe]

You know what hurts shareholders' value? When you make manufacturing companies dispose of their toxic waste responsibly. That's so much more expensive than just letting them dump it down the storm drain, and that money comes right off the bottom line.

That "lower shareholders' value" argument is a call to give corporations immunity from laws that the rest of us have to obey. If shareholders really are the owners of corporations, then they are responsible for their corporations bad acts.

[Randolph Carter]

joe,
I don't think the insurance company AIG was dumping any toxic waste. I don't really know. What I do know is that at the moment, the financial industry is a mongolian clusterfuck of regulations, enforced with schoolmarmish favoritism by people like Spitzer. As if Sarbanes-Oxley wasn't bad enough, the PATRIOT act has made running any company, LLC, or corporation a morass of red tape and headaches.

Tangentially, I think rules like Sarbanes-Oxley have killed more trees than any gung-ho logging company. Get a GE Annuity prospectus, it's like a freakin Russian novel!

[Jason Ligon]

Don't give prosecutions of good cases against corporate criminals a break. Do be accountable somehow if you are wrong and wipe out shareholder value for no reason. That doesn't seem like a bad compromise to me.

[Patrick D]

Think Spitzer's case against Greenberg is bogus and his comments alone are reducing the value of AIG stock? BUY! BUY! BUY!

[David W.]

C'mon you guys. I didn't say we could never curb Spitzers. I am just saying there are other parts of the government that need curbing a lot more right now. They include the people who hurt Jewell and Hatfill's reputations. I think AIG shareholders can take care of themselves a little bit better than those unfortunates. I think Spitzer is a lot less evil than the ppl who prematurely went after Jewel and Hatfill.

Prioritize. This main point of my msg seems to have been ignored. We help the real ppl first and then the liability-shielded and otherwise-coddled corporate persons can have their turn.

[Seamus]

"That "lower shareholders' value" argument is a call to give corporations immunity from laws that the rest of us have to obey. If shareholders really are the owners of corporations, then they are responsible for their corporations bad acts."

Sure, when those corporations injure outsiders. But when the corporations injure their own shareholders, it's nuts to punish the corporations, since that really just means punishing the victims. (To give another example, it would be nuts for Enron shareholders to sue the company for the harm that Enron's management did them when their holdings became worthless. Leaving aside the issue of bankruptcy protection and the fact that you can't get blood from a stone, if Enron's shareholders were to win a favorable judgment against the company, it could only be satisfied from the proceeds of assets that the shareholders already own indirectly.)

[Seamus]

Oh, and unfortunately the idea of suing Spitzer, while appealing, wouldn't work, because Spitzer, unlike Greenberg, is not considered to have a fiduciary duty toward AIG shareholders and thus can't be said to have breached such a duty.

[David W.]

Well, I don't think AIG is saying that Spitzer merely violated a punctilio most sensitive (or whatever Falstaff case says). I think they think Spitzer's words had intentions and effects well beyond what a fiduciary has.

[joe]

Damn, Patrick D landed a right cross to the temple! Yow!

Seamus, "Sure, when those corporations injure outsiders. But when the corporations injure their own shareholders, it's nuts to punish the corporations, since that really just means punishing the victims." Should a drunk who wraps his car around a tree go free because he only hurt himself?

"I think they think Spitzer's words had intentions and effects well beyond what a fiduciary has." You mean like looking out for the public interest, rather than that of the shareholders?

[David W.]

Well, I mean looking for the public interest, perhaps correctly, perhaps negligently, perhaps recklessly, perhaps in downright bad faith. I don't want to pre-suppose whether he is doing is job good or bad. I have some built in bias in favor of him because I think he safeguards public interests that are currently underprotected. However, if he is barking up all the wrong trees, or pursuing crackpot legal theories, or acting arbitrarily and capriously then maybe there is a problem. I really don't know.

What I should have said is:
I think they think Spitzer's words had intentions and effects well beyond what would get a fidiciary into liability.

[Brian Courts]

You mean like looking out for the public interest, rather than that of the shareholders?

Oh please. There is only one interest that Spitzer is concerned with and that's his own self-interest. Of course he's going to sell it as the "public interest" - that's what politicians do.

[Xrlq]

With David Boies on one side and Eliot Spitzer on the other, it's a crying shame both sides can't lose.

[Seamus]

"Should a drunk who wraps his car around a tree go free because he only hurt himself?"

Maybe not, but you don't let him for damages to himself, nor do you compel him (in a criminal case) to provide restitution to himself.

[Seamus]

That should have been: "you don't *sue* him for damages to himself".

[Stevo Darkly]

"Should a drunk who wraps his car around a tree go free because he only hurt himself?"

I think the owner of the tree would have a claim against him -- or the owner of the road, if driving drunk on it was against the rules. But if the guy pulled out of his own garage drunk, drove across his own front lawn and smashed into his own tree, who else's business is that?