What is discovery?

But when the dot-com bubble burst, in 2000, and investors’ cumulative wealth shrank by five trillion dollars, they sought culprits. Eliot Spitzer, then the New York State Attorney General, became their champion. Spitzer wanted to know why the research departments at so many Wall Street firms, instead of issuing warnings, released reports designed to gain favor with companies at the expense of investors. [Henry] Blodget’s Internet proselytizing made him a compelling target. Spitzer sifted through heaps of e-mails and research reports from Merrill Lynch, and uncovered e-mails that suggested that Blodget consistently misled investors by publicly praising digital companies that, privately, he described as “dogs” or as a “POS” (a piece of shit). In November, 2001, Blodget accepted a buyout offer from Merrill Lynch. The Securities and Exchange Commission launched its own investigation and, in April of 2003, concluded that Blodget had issued reports on seven Internet companies that “expressed views inconsistent with privately expressed negative views” of those companies. Blodget accepted a civil settlement, agreeing to pay a four-million-dollar penalty and bowing to a permanent ban on working in the securities industry. [My bolding]

— Ken Auletta, “Business Outsider: Can a disgraced Wall Street analyst earn trust as a journalist?”, The New Yorker, April 8, 2013.

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