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To: Victor Lazlo who wrote (124519)	5/3/2001 9:54:02 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

>NEW YORK, May 2 (Reuters) - The top talent Credit Suisse First Boston brought in during the late 1990s may help the investment bank emerge unscathed from a federal probe into how Wall Street firms dole out shares of hot stock offerings. Federal regulators are investigating if investment banks exploited their positions as underwriters of coveted IPOs and charged big investors extraordinarily large commissions in exchange for hot shares. CSFB, which took a giant leap forward in the deal-making business when it brought in star tech banker Frank Quattrone in 1998, has been the early focus of the investigation. At least six of its employees have been notified they are at risk of being punished by regulators, a source familiar with the matter confirmed. But Quattrone and his group should have enough firepower in the market to keep CSFB a top investment banking player, one analyst said. "Frank Quattrone knows a lot of people," said Harry Milling, who covers the financial services industry for Morningstar. "As long as he's still there, as long as the rainmakers are still there, that's fine." Milling so far is on the money: CSFB was the lead manager in the stock offering of software services company Simplex Solutions Inc. (NASDAQ:SPLX), which soared more than 80 percent in its Wednesday debut. Others aren't so sure, noting the bare landscape of today's IPO market makes it hard to tell how much any controversy can affect business. "How much this (case) is accentuating it is difficult to tell," said Jay Ritter, a professor of finance at the University of Florida. "We'd have to wait until tech stock IPOs pick up again to really be able to measure that." When the market was hot, CSFB was a leader in underwriting tech deals, an IPO sector that has dried up, Ritter said. The firm is likely to lose market share simply because fewer Internet and telecommunications companies are trying to go public, he said. CSFB, like all of Wall Street's biggest firms, has endured a rough year. Last year, the company was the bookrunner on more deals than any other firm, 92 in all. That compared with only one so far in 2001, according to Thomson Financial Securities Data's Richard Peterson. The company also was passed over as manager of the first quarter's biggest deal, the $3.6 billion IPO of Lucent Technologies Inc.'s (NYSE:LU) Agere Systems Inc. (NYSE:AGRa) Rival Morgan Stanley Dean Witter and Co. (NYSE:MWD), the top IPO underwriter in the first quarter, was in charge of the Agere offering. OTHER FIRMS INVOLVED IN THE PROBE The investigation involves other top underwriters including Goldman Sachs Group Inc. (NYSE:GS), Morgan Stanley and Citigroup Inc.'s (NYSE:C) Salomon Smith Barney unit, according to people familiar with the matter. But last month, CSFB placed three employees on leave as the federal probe accelerated. All three worked with Quattrone in California, including two executives that catered to his wealthy clients. In the case's latest development, NASD Regulation notified at least six CSFB employees it may charge them with violations, a CSFB source told Reuters on Wednesday, confirming a report in the Wall Street Journal. Quattrone and the three employees placed on leave were not cited by the NASD, the source said. The employees include Andrew Benjamin, who used to be in charge of private-client services, George Coleman, a senior global stock trader, and Thomas Fusco, a salesman involved with big investors, said the source, speaking on condition of anonymity. A CSFB spokeswoman declined to comment, but the firm's co-head of global investment banking, Charles Ward, said in a statement Quattrone is not associated with the investigation. "The decision by CSFB to place certain brokers on administrative leave had nothing to do with the technology group's investment banking clients, or their officers or directors," Ward said. Quattrone "is not and was not responsible for overseeing brokerage accounts or commissions, nor is he or was he responsible for IPO allocations, which are the subject of an industry-wide examination by various authorities," Ward said.