Posted on September 25, 2008
Filed Under Web 2.0 Kool Aid |
No sooner than I gave BusinessWeek’s Business Exchange did I come across an advertisement for it that reminds me just how dumb BusinessWeek can often be.
As you can see above, one of BusinessWeek’s ads for Business Exchange features a photo of Henry Blodget with a smile only a mother could love alongside the caption “Voted the No. 1 Internet Analyst on Wall Street.”
My question: by who exactly? The Disgraced Former Wall Street Analyst Alumni Association?
For those who don’t know (or who have forgotten - which seems to be just about everyone in the tech world), Henry Blodget is no longer an Internet Analyst on Wall Street because he was banned from the securities industry for life.
In 2003, he was charged with securities fraud by the SEC and instead of fighting the allegations against him, decided to pay millions of dollars without admitting or denying the allegations. As part of the settlement, he was banned from the securities industry.
But BusinessWeek’s ad for Business Exchange is even more curious than it is factually inaccurate and deceptive.
After all, Blodget has demonstrated that he doesn’t know what the fuck he’s talking about.
And beyond that, it’s hard to figure out why BusinessWeek would want to associate itself with a man who is one of the widely-recognized poster boys for the Wall Street skulldrudgery that fueled the .com bubble. That bubble, of course, led to billions of dollars in investor losses.
From the SEC’s press release announcing Blodget’s ban from the securities industry:
The regulators charged that, among other things, Blodget, of New York City, issued fraudulent research under Merrill Lynch’s name, as well as research in which he expressed views that were inconsistent with privately expressed negative views. Blodget’s conduct constituted violations of the federal securities laws and NASD and NYSE rules, which require that, among other things, published research reports have a reasonable basis, present a fair picture of the investment risks and benefits, and not make exaggerated or unwarranted claims.
In particular, the SEC alleges, and the NASD and NYSE found that, during 1999-2001, Blodget:
- aided and abetted violations of antifraud provisions of the federal securities laws and violated SRO rules by issuing research reports on one internet company (GoTo.com) that were materially misleading because they were contrary to privately expressed negative views; and
- issued research reports on six other Internet companies (InfoSpace, Inc., 24/7 Media, Inc., Lifeminders, Inc., Homestore.com, Inc., Excite@Home, and Internet Capital Group, Inc.) that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts regarding those companies, contained exaggerated or unwarranted claims about those companies, and/or contained opinions for which there was no reasonable basis.
BusinessWeek might be fooled by Henry Blodget 2.0 (a lot of people have been) but this is one tiger that hasn’t changed his stripes. Not surprising given that he .
Bottom line: BusinessWeek’s ad is a real slap in the face to all the poor suckers who lost money following the foolish advice of “analysts” like Blodget back in Bubble 1.0.
And even though a lot of people seem to have forgotten who he is, BusinessWeek can still do a whole lot better than Blodget.
Advice to BusinessWeek: find somebody reputable to replace Henry Blodget in your ads. A person who hasn’t been banned from the securities industry would be a good start.
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