Securities regulators fined former
analyst Phua Young $225,000 for his hyped coverage of
, which took place as top executives were allegedly looting the company.
The NASD also suspended Young, who agreed to the penalty, from working in the securities business for a year. Young, who could not be reached for comment, is not currently working for a Wall Street firm.
A year ago, the NASD charged Young with a variety of misdeeds, including tipping off institutional investors to his rating changes, giving Tyco executives a sneak peek at his research reports and giving an expensive bottle of wine to former Tyco CEO Dennis Kozlowski. Regulators painted a picture of a fawning analyst who was handsomely rewarded by Tyco executives for his support.
The NASD charged that Young's close ties to Tyco executives led him to him issue overly favorable research reports on the company.
"The conduct of this analyst amounted to a betrayal of the objectivity and honesty in research that investors are entitled to," said Barry Goldsmith, NASD executive vice president for enforcement.
The NASD complaint had alleged that Young made multiple trips on Tyco's corporate jets for business trips, sometimes accompanied by Kozlowski. And in a particularly bizarre episode, Tyco, at Young's request, hired a personal investigator to prepare a background report on his then-fiancee.
In April 2002, Merrill fired Young for violating a firm policy that prohibits analysts from giving selected investors a heads-up on research reports and changes in stock recommendations. At the time of his firing, Young was earning about $2.5 million in total annual compensation.
The sanctions against Young, however, are nothing like the legal trouble Tyco's former top executives are facing.
Last month, a New York state judge declared a mistrial in the corruption trial of Kozlowski and his co-defendant Mark Swartz, the company's former chief financial officer. Prosecutors are expected to seek to retry the defendants.
Meanwhile, the company's former general counsel, Mark Belnick, is on trial before another New York jury in a related corruption prosecution.