Regulators Claim To Have CSFB 'Smoking Gun' -USA Today
Monday October 7, 6:46 am ET
NEW YORK -(Dow Jones)- Massachusetts securities investigators say they have found the "smoking gun" in their case against Credit Suisse First Boston internal documents they say implicate star investment banker Frank Quattrone raising the chances that CSFB could face criminal charges, USA Today reported in its Monday editions.
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The documents, obtained by USA TODAY, are potentially the most damaging evidence to date that research put out by CSFB stock analysts was corrupted by greed for investment-banking fees.
"This is clearly a smoking gun in the area of criminal responsibility, especially as it pertains to Mr. Quattrone," says Massachusetts secretary of state and top securities regulator William Galvin.
Two weeks ago, Galvin said CSFB should be prosecuted for fraud and referred the case to New York Attorney general Eliot Spitzer, who has broader powers to press criminal charges under New York state laws. The latest documents were uncovered as part of Galvin's ongoing investigation, which may result in separate civil charges.
USA Today reported that Spitzer's office says it has not begun to review CSFB documents.
The new documents appear to show that CSFB investment bankers touted biased stock research as a marketing edge in drumming up new clients. When the firm pitched its services to tech firm Virata in July 1999, the presentation included a graphic that boasted that "CSFB stands by its Clients." It depicted stock price fever lines showing that its analysts did not cut ratings on a stock despite bad news from a company, while competitors did.
USA Today reported that investigators also found e-mail between Quattrone, co- head of Internet investment banking, and his colleagues that appears to show that an Internet analyst was instructed to resume coverage of Research in Motion maker of BlackBerry pagers after it had paid certain investment-banking fees.
In one exchange, Quattrone and others were told that Research in Motion "paid us the extra $1.8 (million)" and should be returned to "most favored nation status." CSFB resumed its coverage with a buy rating.
Through a spokesman, Quattrone declined comment, USA Today reported.
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