Following the advice of Merrill Lynch analyst Henry Blodget, Debases Kankilal purchased shares in internet company InfoSpace. The value of shares in the company has decreased dramatically since the advice was published and are now worth only a third of the price paid for them by Kankilal.
Although an analyst would not usually be held liable for losses by an individual who bought shares based on his predictions, it seems that there may have been a conflict of interest in this case. Merrill Lynch acted on behalf of a company that was purchased by InfoSpace and so may have had a vested interest in encouraging investment in InfoSpace.
In agreeing to compensate Kankilal, Merrill Lynch has not admitted that a conflict of interest existed.