OT-Rob. Stephens's Paul Johnson..gg..remember Gorrilla Investing?
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Reuters
UPDATE - Fleet's Robertson fined $28 mln in IPO settlement
Thursday January 9, 1:38 pm ET
By Brian Kelleher
(Adds details)
NEW YORK, Jan 9 (Reuters) - Robertson Stephens, the defunct investment banking arm of FleetBoston Financial Corp. (NYSE:FBF - News), has agreed to pay $28 million to settle charges it unlawfully profited from initial public offering dealings, securities regulators said on Thursday.
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Robertson, which Fleet shut down in July after failing to sell the loss-making unit, charged big customers inflated commissions in exchange for hot IPO shares during the bull market days of 1999 and 2000, said NASD, formerly the National Association of Securities Dealers.
In a separate action, the U.S. Securities and Exchange Commission fined Robertson $5 million for allegedly fraudulent research issued by a technology analyst who stood to profit if mergers he was touting were completed.
Allegations of abusive IPO allocation practices and bogus stock research have dogged investment banks since the tech bubble burst in early 2000. Robertson's settlement follows a landmark $1.4 billion pact last month between 11 large investment banks and federal and state regulators.
"Profit sharing with customers in connection with the allocation of IPO shares is a serious violation of NASD rules and severely undermines the integrity of the markets," NASD Vice Chairman Mary Schapiro said in a statement on Thursday.
NASD charged that Robertson would dole out IPO shares to big clients like mutual funds and then charge them a percentage on their first-day gains during the dot-com boom, when shares of new offerings were virtually guaranteed to skyrocket.
Credit Suisse First Boston, a unit of Credit Suisse Group (CSGZn.VX), reached a similar agreement to Robertson's in January 2002, paying a $100 million fine.
The SEC and NASD will equally split the $28 million fine for the alleged IPO allocation infractions.
SEPARATE SEC ACTION
In its separate civil action filed in New York, the SEC said former Robertson analyst Paul Johnson praised proposed acquisitions of private companies by RedBack Networks Inc and Sycamore Networks. (NasdaqNM:SCMR - News)
But Johnson didn't disclose that he owned stock in the private companies, the SEC said, "creating multimillion dollar windfalls for Johnson." Johnson also privately denounced buying shares of Corvis Corp. (NasdaqSC:CORV - News), a company he publicly rated a "buy," the SEC said.
The SEC is seeking a permanent injunction against Johnson, including civil fines.
TOP TECH UNDERWRITER
Robertson neither admitted nor denied wrongdoing in the IPO allocation settlement.
The SEC accused the firm of charging commissions as high as $2.50 per share to institutional clients in exchange for shares of the 75 IPOs they lead-managed in 1999 and 2000.
Typically, trading commissions run around 6 cents per share, regulators said. According to internal communications, certain Robertson managers were aware of the profit sharing, regulators said, but did not identify anyone.
Robertson, based in San Francisco, was a top underwriter of technology IPOs in the late 1990s and early 2000. During that time, IPOs were virtually guaranteed money-makers as stock markets climbed toward record peaks and investors of all sizes clamored for shares of new tech companies.
It was typically big mutual funds and active hedge funds that garnered the most stock because of their existing relationships with the underwriters.
NASD also accused Robertson of failing to properly maintain e-mail records.
Robertson is in the process of withdrawing from the securities industry, NASD said. For the most part, the firm stopped operations on July 15.
Fleet's predecessor, BankBoston, paid $800 million for Robertson in 1998, seeking to profit from the ongoing tech boom. The decision to shut down put some 950 people out of work and cost Fleet $638 million. |
