New York Investigator Joins Morgan Stanley
The lead investigator for New York Atty. Gen. Eliot Spitzer, whose work helped achieve landmark settlements with Wall Street over conflicts of interest, has joined Morgan Stanley to deal with state and federal regulators, the brokerage firm said Thursday.
Eric R. Dinallo, who had been Spitzer’s bureau chief for investment protection, was named managing director and head of regulatory matters. He will “be responsible for the firm’s matters with the various federal and state securities regulators as well as industry self-regulatory organizations,” according to a statement from Morgan Stanley.
The appointment “underscores not only Morgan Stanley’s commitment to regulatory compliance, but to continuing to play a positive role in the shaping of public policy for the securities industry,” Morgan Stanley Chairman and Chief Executive Philip Purcell said.
Dinallo joined Spitzer in 1999 after working in the Manhattan district attorney’s office and in private practice. A Spitzer spokesman was not available for comment.
State ethics law prevents Dinallo from appearing before the state Attorney General’s Office for two years and bars him from dealing with his old office for life on any case he handled or was “directly concerned” with, said Walter Ayres, a spokesman for the state ethics commission.
Investor advocate Evelyn Y. Davis said Dinallo’s hiring shows a need to improve laws restricting the “revolving door” of public employees taking their influence to the private sector.
Dinallo was instrumental in ferreting out evidence that resulted in a $100-million settlement with Merrill Lynch & Co. in 2002. This year, Dinallo also was part of a $1.4-billion “global settlement” involving several state and federal regulators with Wall Street’s biggest brokerages. In both cases, Spitzer’s office said stock analysts gave investors inflated ratings to stocks in order to lure the companies as investment banking clients.
Morgan Stanley paid $50 million in the global settlement and $75 million toward independent research services established under the agreement.
In July, Spitzer and Massachusetts officials launched a joint inquiry into how Morgan Stanley sold customers in-house mutual funds.
