New Business February 25, 2010, 5:00PM EST

A Choir Boy Battles Wall Street

Richard Cordray may not look the part, but the Ohio attorney general has assumed the pit bull role once played by Eliot Spitzer and Rudy Giuliani

http://images.businessweek.com/mz/10/10/600/1010_mz_26cordray.jpg

Cordray denies he has plans to run for higher office Michael Nemeth/Wonderful Machine

By Jessica Silver-Greenberg

Browse Issues

Browse the BusinessWeek Archive

Cordray is suing BofA for allegedly misleading investors Shannon Stapleton/Reuters

Story Tools

Richard Cordray lives in a 130-year-old brick farmhouse near Grove City, Ohio, just four miles from the modest home where he polished his jump shot growing up. He played varsity basketball for the local high school and was valedictorian. In 1987, Cordray won $45,303 on the game show Jeopardy!, retiring as a rare five-time champion. Now, Cordray, 50, is his home state's attorney general. His ethics appear above reproach. When the Dayton Daily News endorsed him for attorney general in 2008 it called him a "choir boy"—a comparison that almost understates the perfection of his résumé. Choir boys sometimes sing off-key.

On Wall Street, Cordray is seen less as too-good-to-be-true than as the heir of pit bull prosecutors-turned-politicians such as Eliot Spitzer and Rudy Giuliani. In the past year, Cordray, a Democrat, has sued Merrill Lynch for allegedly misleading investors and former American International Group (AIG) executives for alleged accounting fraud—winning settlements of $475 million and $115 million, respectively. He's the lead plaintiff in a multistate suit against Bank of America (BAC) alleging that the firm withheld bad news from investors just before its 2009 acquisition of Merrill Lynch. More recently, Cordray has taken on bond-rating agencies Standard & Poor's (MHP), Moody's Investors Service (MCO), and Fitch Ratings, which he says deliberately gave triple-A ratings to junky debt to win fees and retain business. "Some Wall Street corporations seem to act with complete and total disregard for the work of regular Ohioans," says Cordray. "My central goal, and the goal of this office, is to protect those hard-working Ohioans."

Cordray, who was elected attorney general in 2008 following the resignation of fellow Democrat Marc Dann amid a sex scandal, says he's not planning to run for governor in 2014. Others predict he will. "I think it's quite likely," says John C. Green, professor of political science at the University of Akron. "Building a record while in office is good politics in any event—it can help him this year and in future elections." John Fortney, a local television news anchor who has covered Ohio politics for two decades and was a panelist at the 2008 attorney general debate, is certain Cordray will enter the race. "I think you will find him making a run for governor just because the party needs him."

As attorney general, Cordray has chosen his cases with the care of someone intent on burnishing a political résumé. "He files these suits more for politics than for good policy," says Mark R. Weaver, who from 1995 to 1999 served as deputy attorney general under Republican Betty Montgomery and now works as a political consultant. Cordray says his case selection is apolitical. Shortly after taking office, he says, he threw out a suit against lead-paint manufacturers—an easy political target if ever there were one—because the state's legal arguments were too flimsy.

In suing the rating agencies, Cordray is taking on his biggest challenge yet. The firms may be vilified by people angry about the credit crisis, but they're also tough legal competitors. Over the years the ratings firms have succeeded many times in persuading courts that bond ratings are nothing more than editorial opinions, and thus are subject to free speech protection under the First Amendment of the U.S. Constitution. In 1997, Orange County, Calif., lost a suit against Standard & Poor's on these grounds.