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Massachusetts Probe Into CSFB Finds Pressure On Stock Analysts

Sep 6, 2002 | Dow Jones Business News

Massachusetts securities regulators investigating potential Wall Street abuses have gathered e-mails and other evidence showing Credit Suisse First Boston research analysts felt pressured to avoid writing negative stock evaluations on current or prospective investment-banking clients of the firm, Friday's Wall Street Journal reported.

The Massachusetts probe, part of a broad investigation into whether Wall Street firms deceived investors by hyping stocks of companies that were investment-banking customers is likely to lead to an enforcement action against the Credit Suisse Group securities unit, a person familiar with the matter says.

In pursuing the investigation, Massachusetts officials have reviewed more than 80,000 e-mails and other documents delivered under subpoena and have taken depositions from former CSFB employees, this person adds.

In addition to indicating potential conflicts involving research reports, CSFB e-mails also show a link between analysts' compensation and the amount of investment-banking business they worked on. Regulators believe the arrangement may have compromised the independence of some analysts' research, according to this person.

CSFB, while declining to comment specifically on the contents of the e-mails, said in a statement that it supports reforms in Wall Street research sparked by New York state attorney general Eliot Spitzer. "Early on, we welcomed and fully endorsed the Spitzer initiative to make systemic changes to strengthen analyst independence. We are now working closely with the Commonwealth of Massachusetts on this investigation."

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