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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
How CSFB Settlement Changes IPO Game
By: Randall Smith and Susan Pulliam
Wall Street Journal. Tuesday, January 22, 2002
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Excerpt: The settlement of a widely watched IPO case could be a springboard for an eventual overhaul in the way Wall Street firms allocate shares of new stocks to investors. In a settlement expected to be unveiled today, Credit Suisse First Boston will agree to beef up its practices regarding allocations of initial public offerings of stock and pay $100 million following a 1 1/2-year investigation, according to people familiar with the matter. The changes, contained in a final judgment to be filed by the Securities and Exchange Commission in a Washington, D.C., federal court as part of the settlement, require CSFB to adopt and put into place revised policies and procedures for allocating hot IPOs, according to the people familiar with the settlement. They include creation of a new committee of CSFB capital-markets and stock executives to review IPO allocations. CSFB also will be required to "prequalify" some accounts, such as hedge funds, to receive IPOs only after having an account at CSFB for at least 60 days. (Hedge funds are little- regulated private investment partnerships for large investors.) The firm must also review commissions paid by investors around the time of an IPO. The actions apply at this point only to CSFB, a unit of Swiss bank Credit Suisse Group. But the cleanup effort could eventually become part of new IPO guidelines to be drawn up by the SEC. Harvey Pitt, the SEC's new chairman, has said the agency may propose new guidelines after the enforcement phase of the case ends. The CSFB procedures stemming from the settlement "could become a template" for new SEC rules or voluntary adoption of similar procedures by other firms, says Henry Hu, who teaches securities regulation at the University of Texas Law School in Austin.
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