The investment bank Merrill Lynch has agreed to pay out £275,000
to a US investor who claimed that research carried out by one of
the company’s leading internet analysts caused him to incur losses
of about £350,000.
Following the advice of Merrill Lynch analyst Henry Blodget,
Debases Kankilal purchased shares in internet company InfoSpace.
The value of shares in the company has decreased dramatically since
the advice was published and are now worth only a third of the
price paid for them by Kankilal.
Although an analyst would not usually be held liable for losses
by an individual who bought shares based on his predictions, it
seems that there may have been a conflict of interest in this case.
Merrill Lynch acted on behalf of a company that was purchased by
InfoSpace and so may have had a vested interest in encouraging
investment in InfoSpace.
In agreeing to compensate Kankilal, Merrill Lynch has not
admitted that a conflict of interest existed.
