Former Market Analyst Must Pay $2 Million

A former analyst of defunct brokerage Robertson Stephens must pay almost $2 million for omitting from research reports key facts about his own stock holdings, a judge ruled Monday.

A federal jury in New York last year found that Paul Johnson deceived investors in 1999 and 2000 by issuing research reports that didn’t disclose his stake in companies he was recommending.

U.S. District Judge John Keenan ordered Johnson to pay $1.99 million, less than half the $4.8 million sought by the Securities and Exchange Commission in a civil lawsuit.

“The court finds the SEC’s proposals to be too severe and Johnson’s proposals too mild,” Keenan said, turning aside Johnson’s request to pay nothing.

The case, which the SEC brought in 2003, stemmed from the bursting of the Internet stock bubble. It was only the SEC case alleging that analysts misled investors with biased research that went to trial. Eleven big brokerages paid $1.4 billion to settle regulators’ fraud claims.

The SEC sued Johnson for urging investors to buy shares of Redback Networks Inc. and Sycamore Networks Inc. in 1999 and 2000 without disclosing that he owned stock in companies those firms were buying.

Johnson argued that he did nothing wrong, and that Robertson Stephens made clear in its reports that the firm or its employees “may have an interest in the securities” they discuss.