Tyco analyst charged with issuing misleading, exaggerated research reports
May 29, 2003
WASHINGTON - A top Merrill Lynch analyst considered an expert on Tyco International has been charged by securities regulators with a series of securities violations that include issuing research reports on Tyco containing misleading information, giving out non-public information and giving gifts to company executives.
In its complaint, filed Wednesday, NASD, a regulatory body that oversees registered securities professionals, alleges that Phua Young published reports that contradicted his private thoughts about the company and routinely gave Tyco advance copies of the reports. Young also gave L. Dennis Kozlowski, Tyco's former chairman and chief executive officer a case of wine, valued at more than $4,500, and took multiple trips on Tyco's corporate jets. Young was formerly a managing director and senior research analyst with Merrill Lynch who was fired in April 2002.
"Young's close relationship with Tyco compromised his independence as a research analyst," the complaint reads.
The majority of the charges stem from events that took place between February and April 2002, when Tyco planned to spin off CIT, its commercial lending arm. In his reports, NASD said Young inflated his assumptions of CIT's sale price and, in private, expressed a negative view of Tyco's debt level.
Under NASD rules, Young can file a response to the charges and request a NASD panel hearing. He faces a fine, suspension, or possibly expulsion from the NASD.