NY Gov. Spitzer involved with prostitute

By Daniel Trotta

NEW YORK (Reuters) - New York Gov. Eliot Spitzer, the one-time "Sheriff" of Wall Street who campaigned on a promise to clean up state politics, battled reports of a sex scandal on Monday that threatened to force his resignation.

A New York Times report linked him to a $1,000 (498 pound) -an-hour prostitute, saying he was caught on a federal wiretap at least six times on February 12 and 13 arranging to meet with her at a Washington hotel last month. The Times said he was the man described in court papers as Client 9.

Spitzer, a married 48-year-old Democrat, apologized for what he described as "private matter" but said nothing about resigning. Some media reports said he would quit and some state Republicans called for him to step down.

CBS 2 television in New York, citing unnamed sources, said Spitzer could resign and be replaced by Lt. Gov. David Paterson as early as Monday night.

"I have acted in a way that violated the obligations to my family and that violates my -- or any -- sense of right and wrong. I apologize first, and most importantly, to my family. I apologize to the public whom I promised better," Spitzer told a packed room of reporters in New York City with his wife at his side.

"I am disappointed that I failed to live up to the standard that I expect of myself. I must now dedicate some time to regain the trust of my family," Spitzer added.

The news rocked Wall Street, where power brokers resented Spitzer's high-profile inquiries into financial cases when he was New York state's chief prosecutor, and sent shockwaves through the Democratic Party.

"Get ready for a schadenfreude festival on Wall Street," said Barry Ritholtz, director of equity research at Fusion IQ in New York.