Special Report: Amid the Gulf crisis, Wall St touted BP stock

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Around that time, Morgan Stanley was among the chorus citing the strong rebound of Exxon shares after the 1989 Valdez tanker spill in Prince William Sound, Alaska, as a reason to be bullish. "We think the sell-off presents an attractive buying opportunity for investors with medium-term investment horizons," the firm wrote.

All told, 27 of 34 analysts tracked by Thomson Reuters rated the stock "buy" or "outperform" as recently as May 11. The other seven rated the shares "hold." There was not a single rating of "sell" or "underperform" among those tracked.

And then there was the exuberant television host Jim Cramer, who insisted that Bear Stearns was fine just days before the company's stock crashed. On May 10, he told viewers of his "Mad Money" show on CNBC that he was purchasing shares of BP for his charitable trust at just under $50. "If you get any good news at all, you're at the bottom," he said. "I'd like to buy it.

If he did, he didn't make out so well. As estimates of the spill grew -- and grew and grew -- and efforts to cap it failed, BP's stock sunk ever lower. It didn't hit bottom for another month, the New York-traded ADRs touching $29 in midday trading on June 9, down 52 percent from just before the Deepwater Horizon disaster. That's approaching $100 billion in shareholder wealth that has been destroyed.

How could so many analysts have gotten the call so wrong? Of course, to err is human. And Wall Street is also prone to herd-like tendencies. But some experts say the unanimity of error around the BP blow-up also has exposed -- yet again -- the conflicts and weaknesses that still bedevil the sell-side analyst community, despite a decade of much-heralded reform.

Like its fellow major oil producers, BP is a huge securities issuer and one of Wall Street's larger underwriting customers. The company sold $38 billion of debt over the past five years, generating hundreds of millions of dollars in fees on 64 deals, according to Thomson Reuters data. The top underwriters were UBS and Credit Suisse, both of which rated BP shares a "buy" in May after the disaster.

No one has alleged an organized conspiracy, and among those who were most bullish on BP were Evolution Securities, Charles Stanley and ING, who do no underwriting business with BP.

But despite all the new rules and practices enacted over the past decade to eliminate conflicts of interest, analysts can still be influenced by the unspoken threat that their firm will be left out, Bentley University professor of finance Leonard Rosenthal said.

"Underwriting is a big factor," Rosenthal said. "There's always going to be pressure on sell-side analysts to be more optimistic."