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Ex-Unit of FleetBoston Fined $28 Million In IPO Case

Jan 9, 2003 | Wall Street Journal

Securities regulators have fined the former Robertson Stephens unit of FleetBoston Financial Corp. $28 million for improperly sharing profits with customers on hot initial public offerings.

The case is similar to a year-long investigation which resulted in a $100 million fine paid by the Credit Suisse First Boston unit of Credit Suisse Group a year ago. The regulatory unit of the National Association of Securities Dealers and the Securities and Exchange Commission levied the fine and sanctioned the firm in a settlement announced Thursday in which Fleet neither admitted nor denied wrongdoing. The fine will be split evenly between the two agencies.

The agencies alleged that Robertson Stephens, which Fleet decided to shut down last year, collected inflated commissions from more than 100 customers on other trades in exchange for receiving the hot initial public stock offerings, some of which rose as much as 355% when they began trading.

FleetBoston will also pay the SEC an additional $5 million to settle conflict- of-interest allegations involving a research analyst. The company said penalties won't affect current financial results because the company already set aside money for a settlement when FleetBoston took a $435 million charge for shutting down Robertson Stephens last year.

A FleetBoston spokesman said the company had cooperated with regulators.

"We are pleased to get this matter behind us," he said.

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