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Wall St. Settlement Near

Citigroup, CSFB Said To Be Close To A $200M Deal With Regulators To End Conflict Probes

Nov 15, 2002 | CNN/MONEY Wall Street's top financial institutions will meet with federal and state regulators Monday in what could lead to a multi-million dollar settlement ending a probe into allegations of tainted stock research, sources said Friday

Credit Suisse First Boston and Citigroup are expected to agree to pay fines "in the ballpark" of $200 million to settle charges, according to Reuters, which cited a source familiar with the talks.

Other banks could faces fines as little as $25 million.

The final fine amounts are expected to be determined at Monday's meeting. A spokeswoman for CSFB declined to comment. Citigroup was not immediately available for comment.

News on Friday of apparent progress in the deal appeared to help brokerage stocks, which have tumbled this year under the cloud of investigations by state and federal regulators and Congress.

Citigroup jumped 76 cents to $36.90, Lehman Brothers rose $1.12 to $57.86 and Goldman Sachs gained 26 cents to $75.25 Friday.

For months, Wall Street's biggest firms have been holding talks with regulators to resolve conflict of interest questions. In addition to fines, a broad settlement could include changes in how research departments operate.

Allegations of conflicts of interest on Wall Street grew as the bear market deepened. Regulators are trying to prove that analysts hyped stocks to win investment banking business.

Financial institutions have made several voluntary changes. Citigroup has said it will separate investment banking from research, while most brokerage houses have included lengthy disclosures in their research notes. The number of "sell" ratings on stocks has grown.

A new twist on tainted research arose this week involving questions of whether Citigroup CEO Sandy Weill pressured Jack Grubman, a former Salomon Smith Barney analyst, to upgrade AT&T. Both men have denied that happened.

Wall Street is negotiating with the Securities and Exchange Commission, NASD, New York State Attorney General Eliot Spitzer and other state securities regulators.

A $200 million settlement for Citigroup and CSFB would be twice what Merrill Lynch paid earlier this year. The No. 1 brokerage firm settled New York state's charges that its research analysts publicly hyped stocks they privately ridiculed in order to win business for Merrill's investment banking unit.

The settlement could also address charges of initial public offering "spinning" bribing executives with shares of hot stock offerings in exchange for investment banking. Citigroup unit Salomon Smith Barney, Goldman Sachs Group Inc. and CSFB have been accused of the practice. The firms have denied wrongdoing.

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