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Report: Wall Street Fines May Top $1B

Nov 22, 2002 | AP

Wall Street investment firms could face more than $1 billion in fines under plans being discussed by regulators investigating whether the companies misled investors with poor research, The Wall Street Journal reported Friday.

Investigators with the New York state attorney general's office and the Securities and Exchange Commission, and other regulatory groups, are discussing fines of more than $500 million from Citigroup and about $200 million from Credit Suisse First Boston, the Journal said, citing people close to the matter.

Regulators also are seeking fines of about $75 million each from several other major securities firms, including Goldman Sachs Group, Morgan Stanley, Lehman Brothers Holdings Inc., Deutsche Bank AG, UBS AG and Bear Stearns.

Representatives of all the companies declined to comment, the newspaper said.

Investigators from New York Attorney General Eliot Spitzer's office, the SEC, the New York Stock Exchange and the National Association of Securities Dealers were scheduled to begin meeting Friday with the firms to determine final fine levels, the newspaper's sources said.

Smaller fines under $60 million would be sought from U.S. Bancorp Piper Jaffray and Thomas Weisel Partners LLC, the sources said.

"Based on everything we know the findings from the regulators would not be characterized as egregious," a Piper Jaffrey spokeswoman said. A Weisel spokeswoman said she would "be surprised if those were regulators' conclusions because they would be inconsistent with the facts and the firm's own review of the issue."

A settlement could help end Wall Street conflicts that Spitzer has said cost countless small investors millions of dollars. Investors were advised to buy stocks that analysts privately derided in order to bolster the stocks' value and lure the companies as investment banking clients.

In May, Merrill Lynch & Co. agreed to a settlement with Spitzer's office that included a $100 million fine and the separation of its analysts from its lucrative investment-banking business.

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