The NASD announced yesterday that it had fined and suspended Phua Young, an ex-Tyco analyst at Merrill Lynch for a “series of rule violations”. That sort of purposely obscure language always makes me curious, so I looked into it a little more. Here are some clips from emails the $4.5-million salary analyst sent to Tyco:
- An email sent to a top-level Tyco official in which Mr. Young states, “I am paid indirectly by Tyco.”
- An email, sent to Tyco’s CFO, that contained a draft of his reports/ratings in which Mr. Young states, “PLEASE REVIEW ASAP, I WILL NOT SEND IT OUT UNTIL I HEAR FROM YOU FIRST! LOYAL TYCO EMPLOYEE!”.
- In another e-mail following a Young voice mail to institutional clients, Young asked Tyco Investor Relations, “[d]id I not sound pumped up enough?” Tyco responded “you always sound pumped.”
But he was playing both sides. Here is Phua in an internal Merrill email talking about Tyco:
- “I am waiting for $10 [stock price] after tyco [sic] announces the inability to sell CIT for anything near $8B. Liquidity crunch, more distractions, the debt bomb starts to TICK, TICK, TICK . . . .”
- Another time he received an e-mail from Tyco about a pending, unannounced Siemen’s acquisition. It stated: “The attached information makes you an insider until the deal is announced. The information sheet at this stage is preliminary.” Shortly thereafter, Young forwarded the email to an institutional client and wrote, “You can’t use until after announcement.” Obviously irritated, the next day Tyco reminded Young, “DO NOT PUT OUT ANY INFORMATION UNTIL THE STORY CROSSES THE WIRE.”