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To: Dealer who wrote (46815)	1/22/2002 6:20:08 PM
From: stockman_scott	Respond to of 65232

CSFB pays $100M to settle SEC charges 01/22/2002 - Updated 12:52 PM ET NEW YORK (Reuters) — Credit Suisse First Boston, a top Wall Street firm, Tuesday agreed to pay $100 million to settle federal charges it mishandled the allocation of hot stock offerings during the last bull market. CSFB, which neither admitted nor denied guilt in the settlement, was accused by the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD) of charging big customers extraordinarily high trading commissions in exchange for shares of high-flying initial public offerings. "The commission has obtained one of the largest civil penalties ever imposed against a broker-dealer," Stephen Cutler, director of the SEC's enforcement division, said in a statement. CSFB, a unit of Swiss financial services giant Credit Suisse Group, will pay $50 million each to the SEC and the NASD's regulatory unit, which alleged CSFB's indiscretions occurred between April 1999 and June 2000. The investigation stemmed from the heady IPO days of the late 1990s and early 2000, when companies regularly went public to triple-digit gains. CSFB and its rivals scooped up billions of dollars in banking fees for underwriting the offerings. In its own statement, CSFB said it adopted and is implementing different policies for allocating IPO shares and will establish an IPO allocation review committee. The firm will also hire an outside consultant to review the policy changes in one year. "We are very pleased that our firm has reached a full resolution of this matter with regulatory authorities," CSFB Chief Executive John Mack said. "We have brought top legal talent to CSFB to ensure that our compliance program is as effective as it can possible be." IPO fees have dried up since early 2000 The investigation, which involves other big investment banks, has led to a flood of civil law suits by disgruntled investors. It is uncertain if the settlement may provide additional ammunition to the plaintiffs, although legal experts have said it does not set a formal legal precedent. The settlement may pave the way for new rules governing IPO allocations. But at this point, stricter rules will not have much of an impact until the IPO market recovers. Only 106 companies went public last year, raising nearly $37.1 billion, according to Thomson Financial Securities Data. That compared with 386 IPOs worth a combined $59.6 billion in 2000. CSFB was the No. 3 underwriter of U.S. IPOs in 2001, slipping from second place in 2000. For CSFB, the settlement closes an ugly chapter in its history. The firm's tumultuous 2001 was marked by the ouster of its former chief executive, Allen Wheat, in July and a dramatic revenue decline as stock deals and mergers dried up. Mack, formerly president of Morgan Stanley, made settling the case a top priority and hired the former head of enforcement at the SEC as CSFB's general counsel in August. Quattrone helped CSFB ride tech boom CSFB rode the tech boom of the late 1990s to boost its stature in the IPO world. Many experts credit its star tech banker, Frank Quattrone, as being the driving force behind the success. CSFB long maintained Quattrone had no part in allocating IPO shares, but in June, the firm fired three West Coast brokers who answered to him, citing violations of firm policy. One of Mack's intentions when he joined the firm was to make sure the company acted more like a combined unit. Some had noted Quattrone's unusual power as an example of the firm giving executives too much leeway. CSFB's settlement may lead other investment banks to follow its lead, analysts have said. Goldman Sachs Group, Morgan Stanley and Citigroup unit Salomon Smith Barney are also part of the probe, which is still ongoing. ------------------------------------------------------