On The Strength Of Financial Fraud Cases: The Rise Of The State Attorney General

The news that Connecticut Democratic Senator Chris Dodd will not seek reelection is important for many reasons. For one thing, Dodd currently is in charge of the Senate committee overseeing the reform of legislation governing the financial services industry. But we also would like to use his announcement to point out what we see as a growing trend: the rise of the state Attorney General – attributable, in large measure, to their prosecution of financial fraud cases.

We frequently have cited steps taken by New York Attorney General Andrew Cuomo, who likely will run for (and be elected to) the position of Governor of New York later this year. California Attorney General Edmund Brown (who may very well be the next governor of California) and Ohio Attorney General Richard Cordray have taken high profile actions against alleged financial fraud, too.
 
In Dodd’s case, the current Connecticut Attorney General, Richard Blumenthal, is widely considered interested in running for that seat – and is expected to win. One sentence from a New York Times article by Sarah Wheaton today about Blumenthal explains his strong anti-financial fraud leanings, noting that “he attacked Microsoft, tobacco companies and H.M.O.’s in the courtroom, and he has more recently gone after auctions of the possessions of Bernard L. Madoff and credit card rates.”

Other state Attorneys General (and even local prosecutors) may see the road to further political success as one lined by taking a hard line, and a public one, against financial fraud. If they can avoid the problem that ruined Eliot Spitzer, they very well may be right.