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To: Victor Lazlo who wrote (124689)	5/7/2001 12:49:22 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

>Published: May 6 2001 19:53GMT \| Last Updated: May 7 2001 03:34GMT US regulators are understood to be considering broadening the scope of an investigation into investment banks' alleged misallocation of initial public share offerings to include prominent retail clients. The probe, focused primarily on allegations that investment banks demanded kickbacks in exchange for awarding hot IPO allocations to institutional investors, could broaden to include individual recipients of new equity listings during the stock market boom, according to people close to the investigations. The Securities and Exchange Commission offered no comment. But a senior official at one of the targeted investment banks - which include Goldman Sachs, Credit Suisse First Boston, Morgan Stanley and Lehman Brothers - said investigators were not confining the scope of their inquiries to institutional clients of the banks. The development coincides with the revelation that Morgan Stanley awarded Donald DiFrancesco, acting governor of New Jersey, often much higher than average individual allocations in more than 30 highly sought-after IPO offerings he received between 1998 and 2000. According to tax records he sold shares within a day at between 20 and 400 per cent profit. Many of the IPOs were led by Morgan Stanley. Last year Morgan Stanley held an internal inquiry into the allocation of highly sought-after IPO shares to Willie Brown, mayor of San Francisco. The city subsequently chose Morgan Stanley to lead manage a $28.1m bond offering. The bank said the internal inquiry uncovered no violation of public or bank guidelines in its allocation of shares to Mr Brown. Morgan Stanley said it had rigorous guidelines to prevent anyconflict of interest in its IPO allocations to retail customers. "With hundreds of thousands of Morgan Stanley's clients participating in IPOs, we are always mindful of appearance [of conflict] issues," it said.