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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

Securities Exchange Act of 1934
Release No. 48724 / October 31, 2003

Investment Advisers Act of 1940
Release No. 2188 / October 31, 2003

Administrative Proceedings
File No. 3-11322


In the Matter of

HENRY M. BLODGET,

Respondent.   


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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Henry M. Blodget ("Blodget" or "Respondent").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") that the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Paragraphs III.A and III.B below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

A. Respondent, age 37, is a resident of New York City. During all relevant times hereto, Respondent was a registered representative associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), a broker-dealer and investment adviser registered with the Commission.

B. On October 31, 2003, a final judgment was entered by consent against Blodget, permanently enjoining him from aiding and abetting future violations of Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder, and from future violations of Conduct Rules 2110 and 2210 of NASD Inc. and Conduct Rules 401, 472, and 476 of the New York Stock Exchange, Inc., in the civil action entitled Securities and Exchange Commission v. Henry M. Blodget, Civil Action No. 03 Civ. 2947 (WHP) (S.D.N.Y.), in the United States District Court for the Southern District of New York.

C. The Commission's complaint alleged, inter alia, that during 1999-2001 (the "relevant period"), Blodget was a Managing Director and the senior research analyst at Merrill Lynch, covering the Internet sector. During the relevant period, Blodget issued certain research reports on one Internet company that were materially misleading because they contained statements and recommendations that were contrary to privately expressed views as alleged in the Commission's complaint. Blodget also issued certain research reports on six Internet companies that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts, contained exaggerated or unwarranted claims about these companies, and/or contained opinions for which there was no reasonable basis.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Blodget's Offer.

ACCORDINGLY, IT IS HEREBY ORDERED:

A. Pursuant to Section 15(b)(6) of the Exchange Act, that Blodget be, and hereby is, barred from association with any broker or dealer; and

B. Pursuant to Section 203(f) of the Advisers Act, that Blodget be, and hereby is, barred from association with any investment adviser.

By the Commission.

Jonathan G. Katz
Secretary


http://www.sec.gov/litigation/admin/34-48724.htm


Modified: 10/31/2003