Henry Blodget: Mary Meeker Pulls a Blodget on Google
Henry Blodget to Mary Meeker: oh no you didn’t! Issue a Morgan Stanley research report on a company that was “exaggerated, unwarranted, or lacked a reasonable basis,” as the SEC says I did for Merrill Lynch.
Blodget gleefully skewers Internet bubble cohort Meeker for being too “bullish” on Google due to math errors, although in admonishing Meeker’s calculations, Blodget posted some wrong numbers of his own. Of course, in the Blodget view of the world, HIS wrong numbers are merely “typos,” Mary, though, quite contrary.
Blodget is well versed in spinning himself out of valuation binds, and seeking to rewrite Internet history, as I analyze in a skewer of my own: Henry Blodget Has Internet Boom Lessons For NBC
It is obviously ironic that Blodget would blow a multi-billion dollar Internet bubble over valuation whistle on fellow bubble blower Meeker, as Blodget had the SEC whistle blown on him for analyst conduct unbecoming.
Litigation Release No. 18115 / April 28, 2003
Securities and Exchange Commission v. Henry M. Blodget, 03 CV 2947 (WHP) (S.D.N.Y.)
SEC SUES MERRILL LYNCH AND HENRY M. BLODGET FOR RESEARCH ANALYST CONFLICTS OF INTEREST FIRM AND BLODGET TO SETTLE WITH SEC, NASD, AND NYSE
The Commission’s Complaints allege that:
Blodget aided and abetted Merrill Lynch’s fraudulent research on GoTo.com. Further, Merrill Lynch and Blodget published research on five other companies [24/7 Media, Inc.; LifeMinders, Inc.; Homestore.com, Inc.; Excite@Home; and Internet Capital Group, Inc.] that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts, contained exaggerated or unwarranted claims, and/or contained opinions for which there was no reasonable basis.
In the words of Tracy Pride Stoneman, securities lawyer, on Blodget, Meeker and Internet booms:
With Henry Blodget and Mary Meeker pushing tech and Jack Grubman pumping telecom to their brokers and the investing public, it is not happenstance that millions of investors ended up concentrated in volatile, speculative securities. The sad reality is that millions of investors not only paid for this advice in the form of commissions and fees, but they also paid for it with their life savings.
The SEC on Blodget’s penalties:
In his settlement, Blodget has agreed to pay $2 million in penalties and an additional $2 million disgorgement, all of which will be placed into a distribution fund for the benefit of customers of Merrill Lynch. In the SEC action, Blodget also has agreed to a federal court order that will enjoin him from future violations of the federal securities laws and NASD and NYSE rules. Blodget also has agreed to be barred from associating with any broker, dealer, or investment adviser.
Beware Blodget AND Meeker (their math, of course).
ALSO: GPhone Frenzy and Google’s New Risk: Corporate Communication Snafus