FleetBoston Financial Corp. and government regulators are talking about settling probes into the bank’s role in underwriting initial public offerings at Robertson Stephens, its investment banking unit that is now in the process of closing, Fleet said in a quarterly earnings report filed Friday.
The San Francisco-based Robertson Stephens, which is the subject of class action lawsuits and regulatory reviews, said in the filing it was responding to a so-called Wells Notice, which gives recipients a chance to explain their case before regulators decide whether to prosecute.
In most cases, such a notice leads to the filing of charges, legal experts say.
“Robertson Stephens has made a proposal to the staffs (of the Securities and Exchange Commission and the National Association of Securities Dealers) to settle these matters which we understand is acceptable to them, subject to respective agency approval. There is continuing discussion of some details,” the filing said.
Fleet is one of several investment firms facing regulatory action for its IPO deals during the dot-com boom.
Regulators have been examining allegations that firms offered hot new stock issues to favored investors in return for future business.
Bank clients with an inside track to the IPO also allegedly resold the stock on its trading debut, often gaining tremendous profits, and then transferred a share of those profits back to the banks in the form of inflated brokerage commissions.
Other Wall Street firms reportedly being investigated for similar practices include Goldman Sachs Group Inc., Morgan Stanley and J.P. Morgan Chase & Co.
SEC spokesman John Heine and NASD spokesman Mike Shokouhi declined to comment on the specifics of the Fleet probe.
Fleet spokesman James Mahoney said there was no timeline for the talks, but that a $435 million charge taken in the second quarter of the year for the closing of Robertson Stephens does include a reserve amount set aside for a final settlement.
He did not specify how much of that figure was earmarked for the settlement.
Fleet has been phasing out Robertson Stephens since July, when it announced it would close the investment bank after a deal for a management buyout fell apart.
In 1998, Fleet paid $800 million for Robertson Stephens, a well-placed investment bank that had become the darling of Silicon Valley by taking companies public.
Fleet said in Friday’s filing that the company had “substantially completed” the winding-down of Robertson Stephens’ operations during the third quarter of 2002.