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TheStreet Open House

With Groupon Restatement, Wall St. Ethics Discounted

NEW YORK ( TheStreet) -- No sooner had Groupon (GRPN) gone public, the company had to restate their earnings. A warning sign was slapped on their finances. This uncommon and alarming turn of events caused a batch of Wall Street analysts to downgrade the company severely while, curiously, several analysts remained bullish.

Looked at the proper way, this reveals volumes about how Wall Street operates.

Remarkably, though, many media outlets -- and, yes, Marketwatch, I'm giving you the hairy eyeball -- managed to write about this accounting train wreck without mentioning who Groupon's underwriters were. You don't think that the Wall Street analysts who put a smiley face on this disturbing news were (gasp!) the underwriters?! But that would mean that Wall Street hasn't changed a lick...not after the Internet bubble, not after the housing bubble, not after so many crackdowns, not after so many vows of change.

"Groupon: Underwriters Mostly Shrug, But BofA Cuts." That's a Wall Street Journal headline, which gets right to the dark heart of the matter. To its credit, Bank of America (BAC), though an underwriter, downgraded Groupon and took it to task. But Morgan Stanley (MS), Citigroup (C), JPMorgan (JPM) and others came to its defense. Morgan Stanley even termed it a "mild hiccup." Not even a standard hiccup. A "mild" one. For anyone who still believes in fairies and well-intentioned, ethical Wall Street firms keeping research and investment banking separate, it's worth a big old mention.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page.

For his "Business Press Maven" column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers.

Fuchs appreciates your feedback; click here to send him an email.

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