Way back in the mists of time, er 2001, Judge Jed S. Rakoff of the the federal district court SDNY issued a decision unsealing some court documents so that a news outlet, TheStreet.com, could have access to them for news gathering and disseminating purposes.
Back in 1998, 10 stock brokers and brokerage officials had been arrested for crimes committed on the floor of the New York Stock Exchange ("NYSE"). The SEC started a civil suit against one of these criminal defendants in what is known in the law biz as a "parallel proceeding".
The defendant turned around and sued, on a 3rd party complaint, the NYSE in which he contended that the NYSE and four of its officers, Richard Grasso, Edward Kwalwasser, Robert McSweeney, and Brian McNamara where aware of and even encouraged the crimes he committed on the floor of the Exchange. Depositions were taken of these men, and some were placed under seal by Judge Rakoff at the request of the NYSE.
Later, TheStreet.com sought to intervene in the case to make a motion to have those depositions unsealed (there’s a nice timeline at this link, btw). The Judge granted the motion, and he was sustained on appeal.
Why am I telling you all this? Because in order to seal, leave sealed, and unseal the various documents, Judge Rakoff had to read them. And among those documents were transcripts of depositions taken from Grasso, Johnson, and Kwalwasser. In unsealing them, Judge Rakoff noted that disclosure would probably result in "reputational harm."
So, knowing all kinds of inside baseball about allegations of wrongdoing against Grasso, Judge Rakoff probably read his morning newspaper with interest a few years later when Eliot Spitzer took off after Grasso and Ken Langone over Grasso’s inflated pay from NYSE.
After the Emperor’s Club scandal broke, Ken Langone gave the most amazing interview:
CNBC: Do you think that he should resign?
KEN LANGONE: Absolutely.
CNBC: Tell me why?
LANGONE: Because he’s a hypocrite. He destroyed reputations of people who had good reputations and deserved reputations. He talked today about his standards – but what he didn’t talk about was the standards that he held everybody else to that he couldn’t keep. So how do I feel? I certainly feel sorry for his daughters, very much so. I don’t know his wife, but I have to assume she has some idea of this happening. For him? It couldn’t be enough to please me. What he’s done to people, not me, I’m standing, thank God, but the number of people that he besmirched, the number of people whose reputations were earned that he soiled is horrible.
CNBC: Would you say that you were surprised by this news?
LANGONE: Not at all. I had no doubt about his lack of character and integrity. It would only be a matter of time, I didn’t think he would do it this soon or the way he did it. But I know for sure he went himself to a post office and bought $2,800 worth of mail orders to send to the hooker.
CNBC: How do you know that?
LANGONE: I know it. I know somebody who was standing in back of him in line….We all have our own private hells. I hope his private hell is hotter than anybody else’s.
How would a person allegedly standing behind Eliot Spitzer on line at the post office ever bother to notice the amounts of the postal money orders that he bought, or the name of the payee? Doesn’t the purchaser fill the name of the payee themselves ?
Why would some random person know to memorize the name of the payee (this is before the scandal broke), which would have been the name of a corporate shell, unless, of course, the "somebody who was standing behind [Spitzer] in line" was perhaps a private eye tailing Spitzer, hoping to get some dirt on him that some enemy might use?
The judge who issued the recent decision to unseal some of the documents related to the wiretapping in the Emperor’s Club investigation is none other than Judge Rakoff, a man who clearly knows a lot about First Amendment law, and a lot about powerful men on Wall Street who really wanted to see Eliot Spitzer brought down.
This is part one of a three-part series.