First Boston Rejects State DemandsOct 21, 2002 | AP Credit Suisse First Boston and Massachusetts regulators have reached an impasse over the way the investment firm handles stock research.
Massachusetts lawmakers have been pressuring the firm to separate its bankers from its stock analysts as part of a national effort to reform the research operations at about a dozen securities firms.
First Boston's general counsel, Gary Lynch, rejected the state's demand in a letter sent Sunday. He urged lawmakers to avoid "precipitous action," saying the state's effort could jeopardize the reforms that are being sought nationally by the Securities and Exchange Commission.
"By acting independently of the other regulators, your office risks imposing action that is inconsistent with, and potentially in conflict with, the new industrywide reforms being developed for the entire nation," The New York Times quoted the letter as saying.
The two sides have discussed a possible fine of $100 million, The Wall Street Journal reported Monday. Regulators could file civil-fraud charges against the investment firm as early as Monday, both newspapers said.
First Boston agreed in January to pay $100 million in penalties to settle a separate investigation. At the time, the firm was being investigated by federal regulators for allegedly demanding kickbacks of customers' profits from buying and selling new stocks.
First Boston's parent company is Credit Suisse Group.