Credit Suisse First Boston E-mails and documents show a “smoking gun” on conflicts between technology banking chief Frank Quattrone and the firm’s stock analysts, Massachusetts’ top securities regulator said.
Massachusetts regulators uncovered E-mails to Quattrone in March 2001 concerning a “return to most favoured nation status,” for Research In Motion Limited, after the Waterloo, Ont.-based maker of Blackberry pagers paid $1.8 million in banking fees.
“CSFB Stands by its Clients,” read a pitch for Virata Corp.’s initial public offering, showing Credit Suisse was more bullish on companies whose share sales it handled than rivals Goldman Sachs Group Inc. or Morgan Stanley Co.
The documents show that Quattrone, who had oversight of technology research until June 2001, used analyst recommendations to win banking business, said William Galvin, Massachusetts’ secretary of state and its top securities regulator. The documents were handed over to New York attorney-general Eliot Spitzer. Spitzer in May reached a $100-million settlement with Merrill Lynch & Co. over conflicts of interest in research.
“The exchange clearly indicated there was a quid quo pro between banking and analysis,” Galvin said in an interview. “It clearly violates their fiduciary duty – they were not giving good faith advice; it was corrupted by their effort to garner investment banking business.”
Credit Suisse handled Virata’s IPO in November 1999 and a secondary offering of shares on July 2000. The firm also advised on the semiconductor firm’s sale in October 2001 to form GlobespanVirata Inc.
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