Eliot Spitzer has reportedly opened talks with the four fund firms named in his original complaint against Canary Capital Partners. His hope is to settle potential charges against the firms in exchange for reforms in how they conduct business that would protect shareholders. Reports of the settlement talks are being carried on both Bloomberg News and Reuters.

The reports are based on information from an unidentified source within Spitzer's office, according to the news service.

According to the articles, Spitzer's staff has held individual meetings with Strong, Janus, Bank of America and Bank One in the two months since Canary Capital settled. However, no settlement agreement is imminent.

There has been widespread speculation that Spitzer is hoping to use his settlement with 10 Wall Street firms over the conflicted research as a model for his settlement with the fund industry. In the Wall Street analysts settlement Spitzer negotiated a $1.4 billion settlement from the firms.

Whether Spitzer will be able to pull off this type of negotiation at this point in the investigation is questionable though. Unlike the analyst case in which Spitzer had implicated all of the major underwriters, the fund scandals have touched a relative handful of firms. The biggest players in the industry, including Fidelity, Vanguard, American Funds and Franklin Resources are so far untouched by the scandal. Only one of the five firms in Spitzer's net is among the top five in the industry and only two are in the top ten.

Without leverage over the entire industry Spitzer is unlikely to be able to work out a settlement that protects all fund investors. He is also less likely to get a larger monetary settlement than he did with the analyst firms.  

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