Mary Meeker, the Morgan Stanley 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.
Meeker is the second high-profile analyst to be cited for allegedly providing research that cost investors money. Henry Blodget, her peer at Merrill Lynch & Co. Inc. , was named in arbitration proceedings at the New York Stock Exchange by a New York doctor claiming he lost $500,000 following Blodget’s advice.
Merrill paid $400,000 to settle the allegations, saying it settled to avoid paying legal costs. All charges against Blodget were dismissed, Merrill said. The plaintiff originally sought $10.8 million in damages and losses.
Bala Cynwyd, Pennsylvania-based law firm Schiffrin & Barroway, LLP filed the lawsuits against Meeker and Morgan Stanley on behalf of Amazon and eBay shareholders. The suits, which seek class action status, claim she she crossed over the “Chinese Wall,” referring to the solid separation that is supposed to exist between analysts and investment bankers.
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.
Meeker put out recommendations and positive comments on eBay and Amazon “not based on objective analyses, 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 suits were filed on the behalf of people who bought eBay or Amazon shares between Aug. 1, 1998 and Jan. 22 of this year.
Morgan Stanley officials were not immediately available for comment.