Spitzer To Take On Investment Bankers

Spitzer is now believed to be considering opening an investigation into the activities of investment bankers who sold bonds and shares in several high profile companies that subsequently bombed, earning huge fees themselves but costing investors billions.

Any probe is likely to hone in on whether the bankers knew about misleading or incorrect statements made by certain companies sellings stocks and bonds and whether the bankers undertook proper due diligence prior to fronting or participating in stock or bond offerings.

According to Thomson Financial, since 1996 Wall Street houses have sold around $272bn in bonds in telecoms companies alone and have earned $1.97bn in fees from these deals. Salomon Smith Barney is believed to have made $499m from these deals, with Merrill coming in with $318m, Morgan Stanley $297m, Goldman $200m and CSFB $187m.

Spitzer is unlikely to make any move against the bankers, however, until after his involvement in the ongoing probes against Wall Street analysts has been completed. This could take around 18 months.