The Spitzer Spitball

Eliot Spitzer, then New York’s Wall Street-busting Attorney General, once tried to take down the AART. That is, before he took down himself.



A deeper dive into how II’s enduring ranking of Wall Street analysts changed recruiters’ games. For the full background story, see:
“The Plot to Overthrow the All-America Research Team.”

It was editor Michael Carroll’s idea to invite the New York attorney general to give the keynote speech at II’s first AART awards in 2002. Eliot Spitzer was in the throes of investigating Wall Street research for conflicts of interest, which would culminate in a $1.4 billion settlement in April 2003. “It seemed to me he might be provocative,” Carroll says. And how!

Taking the stage at the downtown Ritz-Carlton, Spitzer lambasted the analyst-packed audience. He accused them of “lackluster performance,” waving a study he’d commissioned that declared II-ranked analysts terrible stock pickers and their employers guilty of a deceptive practice if they claimed otherwise. Guests at one table rose to their feet and walked out during the speech, slamming the door. Spitzer called for greater disclosure of stock calls and databases of historical recommendations. But he missed a critical point — the reason AART lives on and competitors’ attempts to rank analysts by their batting averages have flopped. Institutional investors didn’t care all that much about stock-picking. What they did value in an analyst, and still do: industry knowledge, integrity, and accessibility. “Spitzer was right about conflicts of interest — some of which II uncovered in its own reporting,” Carroll reflects. “But he misunderstood the research rankings.”

After the speech debacle, Carroll offered to take Spitzer on a walking tour of Washington Heights, the neighborhood where Carroll grew up, a universe away from Spitzer’s Upper East Side upbringing. Carroll promised to buy lunch if Spitzer could find anyone who had ever bought a stock based on an AART analyst recommendation. “He never took me up on the challenge,” Carroll says. Based on later revelations, perhaps he should have offered something else.