New York State Attorney General Eliot Spitzer knows a thing or two about hedge funds, and not just from a law enforcement point of view.
Mr. Spitzer was an investor in a hedge fund run by Harvard University classmate and TheStreet.com founder James Cramer for a few years in the mid-1990s. Mr. Spitzer apparently cashed out prior to a 1998 campaign for attorney general.
Mr. Spitzer has never denied being an investor. Brad Maione, a spokesman for Mr. Spitz-er's office, would not discuss Mr. Spitzer's previous investments. He did say the attorney general has no money in the market today: "He doesn't own a single share of stock."
But does Mr. Spitzer's experience as a hedge fund investor make him more dangerous or less dangerous to hedge fund managers fearing a wave of regulation is about to break over them? Mr. Spitzer recently launched investigations into possible fraud at several hedge funds. And he recently wrangled a $1.4 billion settlement and a promise to reform investment practices out of some of Wall Street's biggest investment firms.
But Mr. Spitzer recently told attendees at a hedge fund forum that his office is not looking to bash the hedge fund industry. Instead, he is examining individual cases of hedge fund fraud, well, individually.
"The industry does not need fundamental change," he said.
Mr. Maione said any hedge fund investments Mr. Spitzer may have made in the past would be particularly helpful with respect to enforcement.