Tech sector felt the impact of Eliot Spitzer

Eliot Spitzer, the disgraced New York governor making headlines this week for being linked to a prostitution ring, is perhaps best known for his aggressive takedown of unethical Wall Street firms during his days as attorney general. But the former prosecutor also played a big role in cleaning up the high-tech and network industries.

Network World even named Spitzer one of its 50 Most Power People in Networking in 2002. We wrote:

“This sheriff of Wall Street has demonstrated serious zeal in uncovering conflicts of interest among financial services firms that potentially hurt investors. He’s been digging into Citigroup’s Salomon Smith Barney investment banking unit and in particular the work of Salomon telecom analyst Jack Grubman, who is suspected of recommending stocks to help win banking business. The Democratic attorney general handily gained re-election in November. Industry watchers don’t expect this political up-and-comer to stop there.”

Here’s a look back at some of Spitzer’s higher-profile tech industry efforts, documented in the pages of Network World and our sister publications:

— In 2006, Spitzer was among a slew of attorneys general filing a joint antitrust lawsuit against seven dynamic RAM makers over alleged price fixing. Spitzer said at the time that the alleged conspiracy added at least US$1 billion to the cost of the memory chips.

— Spitzer in 2005 and 2006 went after alleged spyware companies Intermix Media and Direct Revenue LLC. Both companies disputed Spitzer’s charges, though both companies’ names also came up in a class action lawsuit filed in 2006 by an antispyware activist and lawyer named Ben Edelman, who accused Yahoo of placing advertisements on spyware-vendor and “low-quality” sites. By the way, Spitzer in 2003, helped to get Yahoo to change its marketing policy after getting slapped for telemarketing and e-mail campaigns directed at people who had asked not to be contacted.

— In late 2005, Spitzer investigated Sony BMG Music Entertainment’s use of extended copy protection software, which used a special “rootkit” cloaking technique to disguise its presence on a PC, and is extremely difficult to remove. It was also considered a security risk by many computer experts and was treated as spyware by many security vendors. After weeks of unrelenting criticism over its use of the software, Sony eventually announced plans to pull XCP CDs from store shelves and launched a program to allow its customers to exchange their music for CDs that did not have the copy-protection software installed. Meanwhile, Network World columnist Scott Bradner predicted at the time that Sony’s digital rights management settlement would help usher Spitzer into the governor’s mansion.

— In light of high profile data breaches, New York in 2005 pushed through a law requiring companies to notify their customers whenever private information has been compromised. The state’s Information Security Breach and Notification Act required businesses and state agencies to inform New York residents “whose unencrypted personal information may have been acquired by an unauthorized person,” according to the text of the legislation.

— Spammers also got Spitzer’s attention. A New York man dubbed the “Buffalo Spammer” in 2004 was convicted of using EarthLink’s network to send out hundreds of millions of unsolicited commercial e-mails and was sentenced to prison for his efforts. Also that year, Network World columnist Mark Gibbs wrote about Spitzer’s attempt to bring down another big time spammer.

He wrote: “It was disappointing but predictable that New York Attorney General Eliot Spitzer’s case against spammer Scott Richter and his company would end not with a bang but a whimper. The original goal of the suit was to fine Richter and company $20 million in damages, but in the end the case was settled for $40,000 in penalties and an additional $10,000 for investigative costs. also must provide the Attorney General’s office with customer information and all advertisements it sends as well as promise to use proper identifying information when registering domain names…Spitzer put a brave face on it: ‘This settlement holds Richter and his company to a new standard of accountability in their delivery of e-mails'” Spitzer’s office had teamed with Microsoft on that case.

— In 2003, Network World’s name came up in the middle of a Spitzer project. As sister publication Computerworld reported: “A New York judge has ordered Network Associates (NAI) to stop placing restrictions on what its customers can say about its products, in a case involving a Network World review of one of its products. The ruling, handed down Wednesday by Manhattan Supreme Court Justice Marilyn Shafer, enjoined Santa Clara-based NAI from ‘distributing, advertising and selling its software” with language that prohibited customers from disclosing the result of any benchmark tests to any third party without the company’s written approval, or publishing reviews of its products without NAI’s consent.'”

— As part of his investigations into the illegal practices of Wall Street firms, “Spitzer sued five corporate executives for repayment of funds garnered through profiteering in Initial Public Offerings and phony stock ratings,” according to a 2002 Fiber Optics Weekly report. “The executives named in Spitzer’s suit are: former Qwest Communications Chairman Philip F. Anschutz; former WorldCom CEO Bernard J. Ebbers; Metromedia Fiber Networks Chairman Stephen A. Garofalo, former McLeod USA CEO Clark E. McLeod and former Qwest CEO Joseph P. Nacchio.” The plights of Ebbers and Nacchio of course have been well documented.

— In the early 2000s, Spitzer argued that the Americans with Disabilities Act requires commercial Web sites to be accessible, while investigating and The companies agreed to pay fines totalling $77,500 and implement a variety of upgrades to help the blind navigate their Web sites.

IDG News Service contributed to this report

Related content:

Canadian business coalition speaks out on copyright reform

Privacy experts push for breach law

FTC cracks down on alleged spyware site

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Jim Love, Chief Content Officer, IT World Canada

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