CSFB may face charges
3 CSFB employees subject of NASD investigation as probe deepens
New York, May 2, 2001: 2:40 p.m. ET (CNNfn) - The regulatory unit of the National Association of Securities Dealers has notified Credit Suisse First Boston that it expects to charge the investment bank and several of its employees with violating securities rules connected with the sales of its initial public offerings, according to a published report Wednesday.
The Wall Street Journal, citing regulatory records and people familiar with the matter, said the charges involve receiving inflated commissions on trades with big institutional clients that got IPO allocations from CSFB.
The NASD notifications result from a federal probe that extended to senior employees in different units of CSFB's New York headquarters, and are the most significant in a series of investigations into how Wall Street firms awarded hot IPOs during the technology stock boom of 1999 and 2000, the paper said.
Documents obtained by CNNfn reveal that Andrew Benjamin, formerly head of CSFB's private client services unit, is the subject of a NASD investigation. Thomas Fusco, a salesman who dealt with institutional investors, and George Coleman, a senior global stock trading executive, are also being investigated. All three executives deny wrongdoing, the NASD documents said.
Last month, CSFB placed two senior employees from its technology group on administrative leave. The two employees were part of the empire headed by technology banking superstar Frank Quattrone. Both employees allegedly handed out shares of hot new issues as part of their jobs in the firm's technology banking group.
CSFB declined to comment on the deepening probe.
"The decision by CSFB to place certain brokers on administrative leave had nothing to do with the Technology Group's investment banking clients, or their officers or directors. As Head of CSFB's Technology Group, Frank Quattrone is responsible for delivering the Firm's investment banking services to technology clients. He is not and was not responsible for overseeing brokerage accounts or commissions, nor is he or was he responsible for IPO allocations, which are the subject of an industry-wide examination by various regulatory authorities. The Firm is cooperating fully with the regulators," said Charles Ward, global co-head of CSFB's investment, in a statement Wednesday.
In December, CSFB confirmed that the investment bank was the subject of a federal investigation into allegations the bank requires big investors to pony up large commissions in exchange for access to hot IPOs. The Securities and Exchange Commission and the U.S. Attorney's office in Manhattan are also investigating several other Wall Street firms as part of the probe.
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