Analyze This! Wall Street's Shame
By Howard Kurtz
Washington Post Staff Writer
Wednesday, April 10, 2002; 9:07 AM
This story about Wall Street analysts is getting way underplayed.
Even the new, we've-got-color Wall Street Journal has it in the business section.
It's a full-blown, eye-popping, steam-from-your-ears outrage.
Sometimes we in the press tend to overanalyze things with too much blah blah blah. This story has incredibly incriminating e-mails that tell the tale. E-mail is where we say what we really think, right?
Sure, everyone knew that Henry Blodget and other stock analysts were pumping high-flying stocks of companies that their brokerage firms did business with (though when we made this argument a year and a half ago, some business journalists sniffed there was no need to insist on disclosure every time these overpriced cheerleaders were quoted or interviewed on the tube. No one's making that argument post-Enron).
So now comes the New York attorney general, Eliot Spitzer, with a haul of internal e-mail messages at Merrill Lynch, where Blodget used to work. (Did you buy pets.com or eToys, both of which Blodget pushed? The companies went bankrupt. This isn't some abstract story; real folks lost lots of real money.)
Blodget, by the way, was paid $12 million last year.
Merrill was touting InfoSpace on its "Favored 15" list of stocks. InfoSpace was selling for $129 in March 2000; it closed yesterday at $1.45.
In one e-mail, Blodget told another analyst "can we please reset this stupid price target and rip this piece of junk off whatever list it's on." InfoSpace remained on the recommended list for months.
Other Net stocks, which Blodget's unit had neutral ratings on, were described as "such a piece of crap," "going a lot lower," or a "dog."
One analyst, Kirsten Campbell, told Blodget in a note that she was feeling pressured to start coverage of GoTo.com with a positive rating. "We are losing people money, and I don't like it," she said. She said she had told investment banker Thomas Mazzucco that "the whole idea that we are independent from banking is a big lie." Mazzucco disagreed.
Brokerage houses say their research analysts are objective and not just trying to generate deals for the banking side. Merrill Lynch says in a statement that nothing has been proven by "a limited number of employee e-mails, taken out of context."
"Junk"? "Crap"? Seems to us the context couldn't be clearer. Some of these pros were deliberately recommending garbage. |
