Subpoenas Issued To SG Cowen. The Massachusetts Securities Division yesterday issued a subpoena to SG Cowen Securities Corp., seeking documents related to the departure of a stock analyst who says he was fired for trying to publish negative reports on biotechnology companies he followed, a state official said.
The subpoena followed a report in the Globe that detailed a lawsuit filed by the analyst, Bill Tanner, against SG Cowen.
In the suit, filed in Suffolk Superior Court, Tanner alleged that he and another biotech analyst routinely had to seek permission from the firm’s investment bankers before downgrading a stock.
Tanner alleged that he was blocked by an SG Cowen investment banking chief from downgrading his rating on Cambridge-based Genzyme Inc. in December.
He also said the firm’s investment bankers were ”very upset” about a February report in which he revealed negative news about another client, Protein Design Labs Inc., of Fremont, Calif.
SG Cowen spokesman James Galvin said he could not immediately confirm the subpoena had been received.
He has previously said that investment banking and research are handled independently at the firm, and that Tanner’s allegations are without merit.
regulatory investigations
Tanner’s suit, however, could pull SG Cowen a hot player in high-tech and biotech stock offerings in the 1990s – into the swirl of regulatory investigations into conflicts of interest at Wall Street firms.
The state Securities Division, for instance, has been investigating Credit Suisse First Boston’s research practices. Last month, the division filed a civil action against the firm, alleging that its executives promised corporate clients positive analyses in return for investment banking business.
And New York‘s attorney general, Eliot Spitzer, has raised research-conflict charges against Credit Suisse, Merrill Lynch & Co., and Salomon Smith Barney this year.
In their subpoena, the Massachusetts regulators seek e-mail, personnel files, and other documents detailing the circumstances under which Tanner left SG Cowen, the state official said.
The Securities Division declined to comment.
In his lawsuit, Tanner said he was fired in May from his $2 million-a-year position by SG Cowen’s chief executive, Kim Fennebresque, who later allegedly discouraged Banc of America Securities from hiring Tanner.
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