Investigation Of Investment Banks GrowsSep 17, 2002 | USA Today
Two of Wall Street's most prestigious investment banks, already under investigation by Congress, were asked Monday to hand over information about 15 more Internet companies they helped go public.
The House Financial Service Committee asked Credit Suisse First Boston to turn over documents about six additional companies, including VA Linux, Gadzooks and Selectica. Goldman Sachs was asked for information about nine other companies, including Yahoo, eBay and eToys.
The committee, which has already subpoenaed documents from Salomon Smith Barney, is looking into whether stock analysts at Credit Suisse and Goldman Sachs issued biased investment advice in order to protect their investment banking relationships.
The committee also wants to know if the Wall Street firms gave executives and directors at those companies preferential access to coveted shares in other Internet companies that were going public.
Anyone fortunate enough to get shares in the VA Linux IPO saw their investment jump 698% on the first day. For investors in eToys, the first-day gain was 282%.
Goldman Sachs said it is cooperating with the committee. ''We remain confident that our business practices will withstand the toughest scrutiny,'' spokeswoman Kathleen Baum said.
Credit Suisse also has said it is working with the committee.
In a July 25, 1999, e-mail, a Credit Suisse Internet analyst was told that executives who were ''friends of the investment bank'' that hired Credit Suisse to take their Internet company public ''will most likely receive shares'' in the firm's subsequent IPOs. CSFB says the 3-year-old e-mail does not represent or claim to represent the firm's current or former policies.