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Massachusetts To File Civil Charges Against CSFB

Oct 21, 2002 |

Massachusetts state regulators expect to file civil charges against Credit Suisse First Boston as a result of their probe into alleged conflicts of interest between the investment bank's bankers and research analysts.

The charges are related to a spate of e-mails investigators have released which suggest that analysts were influenced by investment banking consderations.

The move comes a week after William Galvin, Massachusetts secretary of state, said he planned to question Frank Quattrone, Credit Suisse First Boston's star technology banker. The questioning came after Massachusetts state investigators turned up what they characterised as incriminating e-mail evidence against the investment bank.

The e-mails concern CSFB's relationship with two technology companies, Research in Motion, the maker of Blackberry pagers, and Virata.

The Research in Motion e-mail, written by Mr Quattrone, seemed to show CSFB resuming research coverage on the company with a "buy" rating. Research was resumed after the company paid CSFB $1.8m in investment banking fees.

A CSFB pitch to Virata, a semiconductor supplier, included an illustration stating that the investment bank stood by its investment banking clients when other analysts downgraded stocks on bad news.

The new e-mails emerged after Mr Galvin had already referred evidence to Eliot Spitzer, New York attorney general, and asked him to consider prosecuting CSFB for fraud. Massachusetts is one of a number of state and federal authorities investigating conflicts of interest on Wall Street.

Separately, Utah securities regulators say they will press their investigation of Goldman Sachs over alleged conflicts of interest, even if the bank takes part in a "global" settlement being negotiated by securities regulators and Wall Street.

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