Amazon’s Jeff Bezos backs Henry Blodget with $5 million

The Securities and Exchange Commission may have booted Henry Blodget off Wall Street, but the former Merrill Lynch & Co. Internet analyst has attracted some big fans for Business Insider Inc., which he co-founded in 2007.

A major endorsement for the online news site landed this week in the form of $5 million -- venture capital rounded up by Amazon.com Inc. Chief Executive Officer Jeff Bezos.

“Jeff’s leadership, vision and philosophy at Amazon have been an inspiration to a whole generation of startups and entrepreneurs, including me,� Blodget told Bloomberg News. “It is a privilege and pleasure to have him invest in the company.�

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Back in 1998, when Blodget was working as a stock analyst, he predicted Amazon shares would nearly double to more than $400 per share – a level the online retailer’s stock soon reached.

Such endless public enthusiasm helped fuel the era’s boom in online enterprises. But when Blodget’s emails were made public, showing he privately disparaged companies he was publicly cheering, it hastened the dot.com bust and ruined his reputation.

In 2003, as part of a massive settlement between Wall Street and securities regulators, Blodget agreed to pay a $2-million fine and return $2 million he allegedly earned improperly. He was barred for life from associating with the securities industry.

The 47-year-old Blodget, the subject of a recent New Yorker profile by author Ken Auletta, told Auletta that he hopes to be reinstated to the industry one of these days.

“Ten years ago, I got what amounted to a dishonorable discharge from the industry, and I’ve always been ashamed of that,� he said.

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