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Wall Street Analyst Fired, then Sued, After Reporting Investment Bank to Congress
 
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  • In 2006, an investment bank wouldn't allow it's analyst to lower his rating
    on a client even though it's stock price exceeded his target price.
  • The analyst's supervisor asked him to "finesse" his target price in an email.
  • The Bank ignored two email requests to remove his name from coverage.
  • The analyst was fired two days after he reported the emails to Congress.
  • The Bank continued to recommend the stock in his name after he was fired.
  • Congress sent the emails to the SEC, which didn't prosecute the bankers.
  • A Pulitzer-Prize Winning Journalist wrote two NY Times articles on the incident and Maria Bartiromo interviewed the analyst on CNBC.
  • The bank sued for $25M claiming they owned the incriminating emails.
  • In 2009, Wall Street Arbitrators ruled in favor of the investment bank.
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Timeline and Documents:
  9/13/05  RESEARCH REPORT  Analyst initiates coverage on Halozyme at $1.86 with an 'OutPerform' rating and target price of $2.88.  
  12/13/05  BANKING DEAL  Rodman receives a banking fee from Halozyme, which classifies Halozyme as an 'investment banking client'.  
  Jan '06  RESEARCH DIRECTOR  Rodman promotes a former retail stock broker named Michael King to be Director of Research.  
  Feb '06  JOB SECURE  Analyst is most experienced, ranked first in client reviews, top picks are surging, & Rodman hiring him 3rd associate.  
  2/20/06  PRICE INCREASE   The stock price of Halozyme increases significantly this week despite no change in its financial fundamentals.  
  2/24/06  TARGET PRICE  Analyst decides to downgrade rating on investment banking client because it's stock price has reached his target price.  
  2/24/06  SALES PRESSURE  Head of Sales surprises analyst by blocking downgrade with demand that he talk with company a second time.  
  2/24/06  BANKING PRESSURE  Michael Vasinkevich, the Rodman banker who covers Halozyme, contacts analyst to talk about stock.  
  2/25/06  FINESSE REQUEST  Director of Research emails analyst to suggest he "finesse the target price" rather than lower the investment rating.  
  2/26/06  FINESSE REFUSED  Analyst replies to finesse request in email saying, "I have no interest in 'finessing' price targets".  
  2/27/06  REPORT SUBMITTED  Analyst declines Director of Research's suggestion and emails the report to members of Investment Committee.  
  2/27/06  REPORT REJECTED  Director of Research sends a email to the analyst in which he refuses to allow the report to be reviewed by the IRC.  
  2/28/06  COMPLIANCE INACTION  Analyst emails Head of Compliance twice asking to have his name removed from coverage of the stock.  
  3/2/06  REMOVED FROM RESEARCH  Rodman emails its employees announcing that analyst is being removed from the Research Department.  
     REASON?  Rodman states Reg. AC doesn't require a firm to remove an analysts name from coverage simply because he demands it.  
  3/2/06  $3.50/SHARE   Despite price target of $2.88, attempts to downgrade and remove name from report, Halozyme remains rated 'OutPerform'.  
   BUSINESS TRAVEL  Analyst continues working for Rodman, and is reimbursed for travel to Salt Lake City and Boston for business.  
  3/7/06  CONGRESS INFORMED  Analyst tells US Senate Finance Committee about Rodman's actions and provides copies of emails.  
  3/10/06  RODMAN INFORMED   Analyst tells Rodman partner Ed Rubin that he has reported Rodman's action to the Senate Finance Committee.  
     REASON?  Rodman partner John Borer said analyst had "gone too far this time" when he told Congress.  
  3/14/06  TERMINATION  Rodman emails analyst notification that his employment has been terminated with no written explanation for cause.  
  3/15/06  ANALYST SEEKS HELP  Analyst calls Finance Committee and says Rodman told him that he was fired for reporting matter to Congress.  
  3/15/06  SEC INVESTIGATION  Analyst receives call from lawyer in the enforcement division of the Securities and Exchange Commission.  
  3/27/06  RATING CHANGED  Rodman finally removes the analyst's name and 'OutPerform' rating from Halozyme.  
  4/9/06  NY TIMES  Gretchen Morgenson, who received Pulitzer Prize for Wall Street Global Settlement reporting, writes article Rodman's actions.  
  4/12/06  DEFAMATION  Rodman makes defamatory remarks on analyst's industry record claiming an investigation he was never told about.  
  5/25/06  GENERAL CLARK  Receives letter from Senate Finance Committee Chairman Grassley telling him to appear before staff investigators.  
  5/25/06  SEC LETTER  Chairman Grassley and Ranking Member Baucus send letter to SEC Chairman asking for update on Rodman investigation.  
  7/13/06  SENATE INVESTIGATION  Senate Finance Committee staff question General Clark about Rodman's actions against analyst.  
  9/20/06  SENATE LETTER  Recaps General Wesley Clark's statement that the analyst was fired for reporting the Reg. AC violation to Congress.  
  10/4/06  NY POST  Article reports that NY Attorney General and SEC have issued subpoenas against Rodman in regards to analyst case.  
  10/5/06  NY TIMES  Article by Gretchen Morgenson reveals Senate letter that suggests analyst was fired for reporting matter to Congress.  
  10/5/06  CNBC  Devotes a six minute segment of their aftermarket show to research independence and features the analyst fired by Rodman.  
  10/11/06  NY POST  Reports Rodman filed a federal lawsuit against analyst with no warning claiming defamation and cites this web site.  
  10/12/06  WEB INTEREST  There were 20,343 requests for this web site between October 5 and October 12 according to this host's web report.  
  12/22/06  FEDERAL LAWSUIT  Judge rules against Rodman after they file a lawsuit against the analyst for putting this info on web site.  
  5/2/07  ARBITRATION STARTS  Selection of arbitrators began for arbitration that was originally planned for 2H07, but delayed until Dec-08.  
  7/15/09  FINANCIAL REFORM  Analyst meets with three Senate and five Congressional offices to discuss importance of Regulation AC.  
  5/24/13  ARBITRATION ENDS?  Arbitration still ongoing, more than twice average arbitration time, due to delays by Rodman.  
 
NOTE: This web site chronicles events that it believes are true, documented and relevant. There may be other related events that are not included because they cannot be proven, are not significant, or because the documents or testimony were discovered as part of arbitration proceedings that are covered by a confidentiality agreement. Readers of this blog are encouraged to contact Rodman & Renshaw for their version of events before forming any conclusions.
 
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