NPR: All Things Considered Merrill Lynch Settlement

"NPR's Beth Fertig reports that Merrill Lynch has agreed to settle charges it misled investors with inflated stock ratings. The nation's largest brokerage firm will pay $100 million to New York and other states. The settlement follows a 10-month investigation by New York's attorney general, who uncovered embarrassing emails in which Merrill Lynch analysts made negative comments about the very same stocks they were recommending to the public. (3:30)"

Salon Lock up the analysts and throw away the key

"But will individual analysts take a fall? History suggests they won't. White-collar criminals almost never pay out of pocket or go to jail. The reasons go deeper than just the ability of analysts to hire the best lawyers. According to experts, American capitalism at the turn of the 20th century does a great job of encouraging entrepreneurship and risk taking but lacks an effective mechanism for punishing those who go too far. The two predominant legal responses -- the criminal prosecution and civil class-action suit -- continually fail to do the job."

The Street Stock Analysts' Dirty Little Secret

"The real skinny is that virtually no one who matters in the investment industry -- which is to say, portfolio managers at large pension, mutual and hedge funds -- ever took nine-tenths of research reports seriously. Only the public did. As I explained in my book Online Investing, analysts at the major brokerages for years have been looked down upon by institutional investors as sales support staff, a pack of kids with fancy college degrees who provided little more than PR material for the retail brokerage and investment banking teams. If they were called "promoters" rather than "analysts," the public would have had a better idea of their role in the retail investment ecosystem. The funds have their own, unbiased, independent staff analysts."

redux [04.19.02]
The Motley Fool How Do Analysts Sleep?

"It should have been the "big-freaking-surprise" story of the year, and yet we still find ourselves shocked at the cynicism and self-interest of Wall Street's equity analysts. We have known, and yet not known, that analysts commanded enormous salaries based in no small part on their ability to drive investment banking business to their companies. After the Attorney General of New York's inquiry, we know for sure, and the truth is as bad as we imagined."

redux [04.10.02]
The Washington Post Analysts Accused Of Touting Tech 'Junk' To Boost Profits

"At the height of the technology bubble, Henry Blodget and other Internet analysts at Merrill Lynch & Co. issued glowing reports about companies that would later crash, while privately deriding the stocks to one another in salty, dismissive language.

One company given a top rating by analysts was described in-house as "a piece of junk." Another was called "such a piece of crap," even though analysts in Merrill's Internet group told investors to buy more of it for their portfolios. One analyst worried that regular investors "are losing their retirement" because of the misleading advice."

redux [08.21.01]
The Standard Days of Reckoning

"There is something a bit disingenuous about this legal assault, which is, after all, mainly about people who lost money speculating in the stock market. Some are suing because they couldn't get shares in initial public offerings at the offering price; others are suing because they got the shares and lost money on them. Federal regulators and politicians are suddenly shocked - shocked! - to discover that conflicts of interest are rampant on Wall Street.

Still, with $3.3 trillion up in smoke since the Nasdaq hit its peak in March 2000, it's hardly surprising that the people and institutions that helped engineer the epic Internet bubble are being called to account. And for the technology finance industry - which was transformed by the Nasdaq's boom from a relatively obscure West Coast offshoot of Wall Street into a major source of growth and profits for top-tier firms such as Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Credit Suisse First Boston and Merrill Lynch - it's going to be a painful reckoning indeed."

redux [07.19.01]
The New York Times Opinion Page Cleaning Up Stock Market Research
[requires 'free' registration]

"Investment banks, whose analysts were touting stocks with overwhelming zeal even as the stock market started crashing, are now trying to rehabilitate their images. Last week Merrill Lynch , by some measures the world's biggest investment bank, declared that except under strictly monitored circumstances, its analysts would be prohibited from holding shares in the companies they research. The goal is to remove any incentive for them to boost a stock to ensure their own enrichment. But this novel policy will not entirely prevent conflicts of interest from arising. It should be regarded as a springboard to a more complete revamping of the relationship between publicly available research and investment banking."

redux [06.27.01]
News.Com Will Wall Street analysts turn apologetic?

"Wall Street analysts are known for a lot of things--being too optimistic, failing to warn investors about the dot-com crash, and being the latest target for Congress--but they usually aren't known for their apologies."

"Morgan Stanley analyst Jeffrey Camp cut Exodus to a "neutral" from "strong buy" and gave his clients an apology.

"There are few moments in my career that rival this one in its difficulty and unpleasantness. Elbert Hubbard said, 'The line between failure and success is so fine, we scarcely know when we pass it.' But passed it I have, and it is time to own up," Camp said."

redux [06.11.01]
News.Com Did so many get it so wrong?

"As pundits rush to explain what happened on Wall Street, fingers point to the thought leaders. We read exposés on Mary Meeker and Frank Quattrone--once dubbed geniuses--and wonder how they could have sponsored initial public offerings for the nth online grocer or women's portal. Or we ask ourselves how stock analysts could ride a stock all the way down from $150 to $3, all the while touting it as a "strong buy.""

"These are people who were supposed to be making smart decisions. How did they get it so wrong? The answer is, they didn't. "

redux [05.10.02]
Business2.0 Who's to Blame for the Dotcom Insanity?

"And yet, as compared with previous bubbles -- say, junk bonds in the '80s -- the dotcom fiasco owed relatively less to Wall Street's lack of ethics and relatively more to willing contagion by the public itself. "The market wanted these stocks," Blodget observed to CNBC, and Blodget was right. By the millennium's waning months, it was common, for example, to see engineers in Silicon Valley with CNBC in one pop-up window on their computer screens and their brokerage accounts in another, and they would -- or so I'm told -- trade all day and scarcely attend to their jobs.

Of course, the financial press -- CNBC in particular -- fanned the flames, but faulting it or any other group misses the epidemic nature of the contagion, which naturally infected the whole of society without distinction."

redux [03.13.01]
The Washington Post Who Blew the Dot-Com Bubble?

"Henry Blodget, Wall Street's loudest cheerleader for Internet stocks, made it to the front page of the New York Times last week. And thereby hangs a tale about the media and the bubble."

"For it was the mainstream media -- which now take such delight in scolding those involved in the dot-com mania -- that helped push the idea that anyone could get rich by playing the market.

"The media invented Blodget," says Christopher Byron, a columnist for Bloomberg News and MSNBC. "In a bull market everyone loves to cheer, and Henry Blodget was everyone's first phone call. . . . Where were they when companies were trading for 150 times revenues? They were repeating the words of these guys. It's disgusting."