NEW YORK (CNN/Money) - Former Merrill Lynch & Co. analyst Henry Blodget faces possible sanctions from one of Wall Street's top regulators for his research calls made during the bull market of the late '90s, a source familiar with the situation told CNNfn Friday.

The regulatory arm of the National Association of Securities Dealers has informed Blodget that it may take regulatory action against him, the source said.

Calls to Blodget, who became a focal point for criticism that analysts hyped stocks to win banking business, were not immediately returned.

The NASD sent a notice to Blodget in late December, the source says. The former Internet analyst now has a chance to refute the claims before any action such as a fine or suspension from the industry is taken.

The NASD declined to comment on the story that was first published in the online edition of the Wall Street Journal.

A sanction against an individual Wall Street analyst would come less than a month after 12 of the biggest banks and brokerage houses agreed to pay more than $1.4 billion to end a probe into conflicts of interest between stock research and investment banking.

Without admitting any wrongdoing, the firms agreed to change the way they conduct business by separating research from banking, while funding independent research and education for investors.

At the time of the Dec. 20 deal, it was expected that regulators in the coming weeks would announce findings, if any, against individual analysts and bankers.

Blodget left Merrill Lynch in late 2001 just after the start of that now-settled probe. But that did not keep regulators from releasing e-mails suggesting that Blodget, under pressure from his bosses, publicly touted stocks that he privately disparaged. For its part, Merrill paid $200 million in the settlement.

Another analyst, Jack Grubman, who followed the telecommunications industry for Citigroup's Salomon Smith Barney unit, reached a settlement with the New York Attorney General's office last year that bars him from the securities industry and fines him $15 million. Grubman was accused of using overly bullish stock ratings to lure investment banking deals to Citigroup, a charge he denied.