Merrill Lynch pays for playing bull during boom

washington: a new york-based indian doctor rocked the financial world on friday by winning a $400,000 settlement against the no.1 american brokerage firm merrill lynch for stock market losses he said he suffered on account of the bullish recommendations by its star analyst. dr debashis kanjilal, a paediatrician who lives in jackson heights, had filed a civil case against merrill lynch with the new york stock exchange claiming he lost more than $500,000 from his merrill account after buying shares of the internet company infospace based on the 'strong buy' recommendation of analyst henry blodget.blodget, a posterboy for the internet era, is a celebrated analyst whose word was gospel for stock market punters. but kanjilal says shortly after he bought 4600 infospace shares at around $ 130 in march 2000 at the height of the internet boom, it began to tank, slipping to $60 and then $ 50 by mid-may. concerned, kanjilal says he spoke daily to his broker micheal healy, who told him to 'sit tight' because blodget had a "buy" recommendation on the stock and a $100 price target. by december, the stock had plummeted to the teens. kanjilal heard on the news that blodget had finally downgraded infospace. he called his broker and sold the stock for $11 a share, losing about $518,000. kanjilal says he later invested in stocks of jds uniphase corp, also on merrill's recommendation, and lost an additional $300,000. infospace, incidentally, is founded by seattle-based indian-american naveen jain, a former microsoft executive, and now trades at around $ 3 a share. in a brief interview with this correspondent, kanjilal said he had been investing in the stock market since 1996 and was aware infospace was founded by an indian. a graduate of calcutta's national medical college who came to the us in 1981, he had earmarked the money for his daughter's education. in his suit, kanjilal had asked for $ 10 million in punitive damages and $ 800,00o to recoup his losses. he finally settled for $ 400,000. he did not say why. he then referred to his attorney jacob zamansky of zamansky & associates in new york, for details. zamansky had not returned calls at the time of writing. although kanjilal won a relatively light settlement, the case has tremendous implications in a stock market roiled by downturns and downgrades. experts fear the settlement could invite a rash of copycat litigation from tens of thousands of investors who have lost their shirt betting on analysts' recommendation. because the case was an arbitration proceeding before the nyse it does not set a legal precedent, but kanjilal's lawyers indicated that they would be going after other high-profile analysts such as morgan stanley's mary meeker and solomon smith barney's jack grubman. they asked clients to bring in their claims. meeker and grubman are among the several high-profile analysts who have come in for a pounding for the evangelical zeal with which they advocated new economy companies. they have been accused of putting out upbeat research reports and plugging for companies that gave their firm other business. the matter has even come up for congressional scrutiny. wall street in june agreed on a set of ethical guidelines to prevent such conflicts. in fact, two of the few analysts who won acclaim for their caution in the boom months were both indian - us bancorp pipar jaffray's ashok kumar and lehman brothers' ravi suria. merrill lynch did not admit to any wrongdoing in the case. "the matter was resolved to avoid the expense and distraction of protracted litigation," a merrill lynch spokesman was quoted as saying by wire services. market opinion was the brokerage settled to avoid embarrassment.