Report: NASD Going After Blodget

Henry Blodget, the former Merrill Lynch analyst forever associated with the Internet bubble, is being investigated over his research by the National Association of Securities Dealers, which is preparing to take action against him.

A source who is close to the investigation and who requested anonymity confirmed news reports Friday that the NASD recently disclosed its intentions to Blodget.

The reports said Blodget received a so-called Wells Notice, which gives the analyst the chance to refute the claims before the self-regulatory agency decides to take action. The NASD has not issued a public statement on the matter, and officials of the association could not be reached for comment.

Last month, regulators, including the NASD, reached a settlement with top Wall Street firms over conflicts of interest involving research analysts and the investment banking arms of their firms. Among the most damaging bits of evidence uncovered in the investigation was a series of emails in which Blodget denigrated stock that the firm was publicly recommending to investors.

And in May, New York Attorney General Eliot Spitzer reached a $100 million settlement with Merrill over charges that analysts, such as Blodget, who ran the firm's Internet research group, hyped stocks to win banking assignments.

Blodget, noted for his 1998 prediction that Amazon would hit $400 a share, could face a suspension or ban from the securities industry.