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Spitzer: Investors fleeced of billions
New York's attorney general says that regulators have failed to detect mutual fund wrongdoings.
November 6, 2003: 7:18 AM EST

NEW YORK (CNN) - Amid an ever-widening mutual fund scandal, New York Attorney General Eliot Spitzer told CNN on Wednesday that regulatory bodies have failed to detect the pilfering of billions of dollars, and said the New York Stock Exchange has to be completely restructured.

Spitzer warned Wall Street that no one is safe -- that he is investigating "company by company."

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"Every time we turn over a rock in the mutual fund industry these days, we are seeing vermin crawl out that are appalling: Late trading; timing by those in the executive boardroom; billions of dollars being scraped off that should be going into the pockets of investors instead ending up in the hands of the executives," Spitzer told CNN's Lou Dobbs in an exclusive interview.

"It's crazy and it's wrong."

He said the damages in the mutual fund sector run in the "billions and billions."

"It's a scandal that is still unfolding," Spitzer said, adding that there are "many criminal and civil cases that will be announced in the months to come."

Mutual fund companies, he said, are now "going through rigorous self-examination, coming back to us and to the SEC and confessing their sins. And they are saying, 'This is what we have found. These are the problems.'"

At the end of the process, he said he will make sure the billions "go back to the investors."

But even Spitzer, who has taken Wall Street on single-handedly, acknowledges he has been shocked by the extent of the corruption he has found.

"I keep saying to myself, 'What will it take to have executives and people to wake up to the fact they have a fiduciary duty?' They have to be honest, straightforward. It's not their money. They are taking money from the folks who have given it to them."

He added: "They're just failing in that duty, and it's a shameful thing, but it just keeps going."

While Spitzer has had an adversarial relationship at times with the Securities and Exchange Commission, he said he is confident he can work with the commission.

"I wish that those who have responsibility would have been there sooner," he said. "Going forward, we're working together."

But he was still highly critical of the New York Stock Exchange for its conduct.

"They failed as a regulatory organization," the attorney general said. "They are the primary defenders of the integrity of the marketplace. They didn't do it. We've got to completely restructure what goes on there."  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.