CRAMER FUND LET SPITZER CLEAN UP
NY Post
By PAUL THARP
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FUND FACT:
New York Attorney General Eliot Spitzer, shown stepping out with his wife, Silda, is trying to clean up Wall Street - but he also made a ton of money in a controversial hedge fund operated by James Cramer.
- NYP: Susan May Tell
May 15, 2002 --
Attorney General Eliot Spitzer - who's crusading to clean up Wall Street's seamy side - made a bundle from a hedge fund that's been criticized for using possibly illegal trading tactics.
Spitzer, a multimillionaire, had put personal money into a hedge fund run by a long-time college pal, Jim Cramer, and reaped gains of as much as 30 percent.
Cramer's fund has been blasted in a new book by a former employee, Nicholas Maier, who says the firm used unethical and possibly illegal trading tactics, which prompted a probe by the Securities and Exchange Commission.
Cramer also has a new memoir about his Wall Street days, and admitted playing trading games.
Cramer denies breaking any laws during the time he ran the $400 million fund, Cramer & Co., which he left last year to be a full-time TV commentator on CNBC and a writer.
In the first year without Cramer, the fund outperformed its long-term track record under Cramer, according to Institutional Investor.
Spitzer's office acknowledged that the attorney general put an undisclosed amount of cash into Cramer's fund around 1993, but pulled it out in late 1997 when Spitzer began his campaign to become attorney general. Hedge funds typically take minimum investments of $250,000.
Spitzer's spokesman said there was nothing improper about Spitzer's investment with Cramer, who was a classmate of Spitzer's at Harvard law school.
Spitzer is not going after the kind of tactics Cramer is accused of using.
The attorney general says Merrill Lynch and at least six other brokerages had analysts hype stocks to the public while privately trashing them. Spitzer is in court tomorrow in his Merrill Lynch probe.
Spitzer has blasted Wall Street for loose ethics that are part of a larger "dissipation of standards," which led to the Enron scandal and even charges of sexual misconduct by Catholic priests.
Spitzer's spokesman said the investment and Spitzer's crusade on Wall Street are not related.
"It's hard to see the parallel between owning a hedge fund it the mid-'90s and the current investigation that centers on conflict of interest by stockbrokers," said spokesman Darren Dopp.
"Mr. Spitzer was indeed participating in a hedge fund but concluded his investment five years ago.
"There's no comparison between a research analyst giving false and misleading advice and a hedge fund manager who touts his hedge fund."
Spitzer doesn't directly own any stock and has put his investments into a blind trust mutual fund, his spokesman said.
Sources also said Cramer hyped how much money he had made for Spitzer.
"Jim goes around saying he made Eliot a ton of money," said one friend. "The investment did well, but it wasn't anything extraordinary. It was a percentage increase comparable to other mutual funds at the time."
"They've known each other for 20 years, but it's not like they're bosom buddies or anything," he added. |
