While former Merrill MER.N analyst and managing director Young touted Tyco’s stock between 1999 and early 2002, the conglomerate traded inside information with him and even agreed to hire a private investigator to do a background check on one of his friends, industry regulator NASD said in its civil complaint.
Young, who once described himself in an e-mail as a “loyal Tyco employee,” published research reports in early 2002 that contained misleading statements and exaggerated claims that contradicted opinions he expressed privately, NASD said.
“The conduct of this analyst, as evidenced by his own e-mails, gifts to the CEO of Tyco, and favors he received from the company amounted to a betrayal of objectivity and honesty in research,” said Mary Schapiro, NASD vice chairman of regulatory policy and oversight.
The NASD said Young also disseminated nonpublic information about Tyco — the troubled conglomerate whose market capitalization plummeted last year amid an investigation that led to criminal charges against its former chief executive, finance chief and general counsel — and gave advance notice of proposed ratings to selected institutional clients.
The complaint further charges that Young routinely gave Tyco advance copies of his research reports that included proposed ratings and analyzes.