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To: AugustWest who wrote (2)	8/2/2001 7:44:51 AM
From: AugustWest	Respond to of 3

Morgan Stanley's Meeker Named in Lawsuits By Brian Kelleher NEW YORK (Reuters) - Mary Meeker, the Morgan Stanley (NYSE:MWD - news) analyst once dubbed ``Queen of the Internet'' for her bullish reports on the sector, was named as a defendant in a pair of lawsuits on Wednesday alleging she provided biased research on eBay Inc. and Amazon.com Inc. The lawsuits come amid increasing scrutiny of Wall Street analysts from investors, regulators, and politicians. Analysts at nine major unnamed brokerage firms used their positions to profit from the companies they covered, acting Securities and Exchange Commission (news - web sites) Chairwoman Laura Unger told Congress on Tuesday. Meeker, whose firm said it had not seen the complaints but believes the claims against it and Meeker are without merit, is not the first high-profile analyst to be named in a complaint by disgruntled investors. Internet analyst Henry Blodget of Merrill Lynch & Co. Inc. (NYSE:MER - news) was named in a $10.8 million arbitration case at the New York Stock Exchange (news - web sites). Merrill paid $400,000 to settle the complaint. Law firm Schiffrin & Barroway, LLP, based in Bala Cynwyd, Pennsylvania, filed the lawsuits against Meeker and Morgan Stanley on behalf of shareholders of Internet icons Amazon (NasdaqNM:AMZN - news) and eBay (NasdaqNM:EBAY - news) -- whose stocks have cratered in the last year. Neither firm is named in the suit. The suits, which seek class-action status, claim Meeker crossed over the ``Chinese Wall,'' referring to the solid separation that is supposed to exist between analysts and investment bankers. The suits -- which legal experts said are novel -- face an uphill battle because these disgruntled investors need to find fault with Meeker's reports, not her motivation for issuing them, one securities lawyer said. Some have questioned whether analysts are under pressure to publish favorable research reports so their firms can get lucrative investment banking businesses, like stock underwriting and merger advisory, from the companies the analysts cover. SEC investigations found 25 percent of analysts at nine unnamed firms invested in companies before they went public that they subsequently covered, Unger said. The agency also found a few analysts sold stocks for profits as high as $3.5 million while advising clients to buy the shares, she said. ``It is possible that the analysts violated not only firm policies but also securities laws,'' Unger said after her testimony on Tuesday, leaving the door open for enforcement. Wall Street, which has been trying to restore the credibility of its research, was mum on the subject of Unger's testimony. Morgan Stanley and Merrill, among other firms, on Wednesday declined to comment on the proceedings. BANKING WAS THE KEY, SUIT CLAIMS Meeker put out recommendations and positive comments on eBay and Amazon ``not based on objective analyzes, but rather on her desire to attract and retain'' the companies as Morgan Stanley banking clients, the lawsuits alleged. The lawsuits also claim Meeker's compensation was directly tied to the amount of investment banking deals she brought in for Morgan Stanley. The plaintiffs have to prove Meeker's research affected the prices of Amazon and eBay stock and then show how much Meeker's research overvalued the stock prices, said Jack Coffee, a professor at Columbia Law School. ``There will be a big problem involving loss causation -- (proving) how much did her recommendation overvalue the stock,'' he said. ``All the usual doctrines of securities law are going to have to get re-examined if they are applied to this context.'' Some legal experts were doubtful the suits would amount to much. ``It's hard for an investor to bring a claim based solely on undisclosed bias ... you have to have a problem with the substance of the report as well,'' said Joe McLaughlin, a securities lawyer at Sidley Austin Brown & Wood. ``I would be very skeptical.'' Morgan Stanley was one of a group of top Wall Street firms that agreed to a set of analyst best practices guidelines in June. Issued by the Securities Industry Association, an industry trade group, one highlight of the new standards prohibited firms from tying analyst compensation directly to deals. Wednesday's suits were filed on the behalf of people who bought eBay or Amazon shares between Aug. 1, 1998, and Jan. 22, 2001. dailynews.yahoo.com