When George Zicarelli, a videotape editor at CBS News, invested his life savings with Salomon Smith Barney in 1999, the firm recommended a hot new fiber optic company called Global Crossing.
"And then the stock starts dropping," said Zicarelli. As the stock, which Zicarelli first bought at $50 a share, began to swan dive, Salomon's star tech analyst, Jack Grubman, stuck to his "buy" rating and said he was "still bullish."
"I constantly asked my broker to reassure me. And he constantly reassured me," said Zicarelli. In the end, Zicarelli said, he lost more than $450,000 on Global Crossing.
"Close to half a million dollars altogether."
But after learning that analyst Grubman was making millions in investment banking deals from the very companies whose stocks he was recommending, Zicarelli is now seeking damages from Grubman and Salomon Smith Barney.
Zicarelli isn't unique in his experience. On Thursday, New York Attorney General Eliot Spitzer announced that his office and the Securities and Exchange Commission are heading a multi-agency investigation of investment analysts with conflicts of interest.
The inquiry will be conducted by the SEC, the New York Stock Exchange, the National Association of Securities Dealers, Spitzer, the North American Securities Administrators Association and several states, according to a statement released by Spitzer and the SEC.
"I think there is a crisis of accountability right now," Spitzer told CBS News Correspondent Anthony Mason before Thursday's announcement of the inquiry.
It's possible that Zicarelli could get some settlement resulting from the inquiry. He has also hired an attorney, Jacob Zamansky, to pursue matters directly.
"Jack Grubman and Salomon Smith Barney have misled investors with thoroughly conflicted stock research," said Zamansky. Zamansky has already won $400,000 in damages for another client from Merrill Lynch. He says the two cases are similar.
"Absolutely," said Zamansky. "It's the same issue."
The issue is the credibility of Wall Street's investment advice and potential charges of criminal fraud. And it's not just burned investors out for blood. Wall Street hasn't faced this kind of legal scrutiny in decades.
"It may only be the tip of the iceberg," said Spitzer, who has been investigating Merrill Lynch.
After subpoenaing company e-mails, Spitzer revealed that Merrill's former Internet analyst Henry Blodget, while publicly touting a stock called Infospace, was privately ridiculing it as a "powder keg" and "a piece of junk."
Spitzer said that across the entire investment industry there is "a desire and an urge to push the boundaries in a way that means fraud on almost a daily basis. And that can't be permitted."
SEC Chairman Harvey L. Pitt said the disclosures that resulted from Spitzer's investigation, as well as practices uncovered by the SEC, the New York Stock Exchange and the National Association of Securities Dealers, "reinforced the commission's conclusion that further inquiry is warranted."
Salomon Smith Barney has refused to comment. Merrill Lynch's chief financial officer, according to the Wall Street Journal, has called its analyst's actions "inappropriate." That may not be enough, said Spitzer, who wants both reform and an admission of wrongdoing.
"If they continue to maintain that what happened was inappropriate, but wasn't illegal, then there will be no settlement. Then there will be much tougher sanctions. There could be criminal charges. And the fate of the company is in their hands."
Among ordinary investors like George Ziccarelli, Wall Street's credibility has already taken a beating.
"I believed 'em," he said. "I know it sounds dumb now. But I did."