In 2002, the Commonwealth of Massachusetts charged CSFB (Credit Suisse First Boston) with violating the Massachusetts Securities Act by issuing erroneous and misleading analyst reports on numerous companies. The Commonwealth complaint describes the influence and control exerted by CSFB's investment bankers on its supposedly independent research analysts and seeks to order CSFB to separate its investment banking and research departments.
More recently, Massachusetts Secretary of State William Galvin and a team of security regulators have uncovered stronger evidence that CSFB deliberately mislead investors with biased technology stock research. Regulators reviewed more than 100,000 subpoenaed e-mails and alleged CSFB altered research reports for investment banking clients and conducted illegal underwriting schemes that were devastating to their smaller investors.
During the IPO (Initial Public Offerings) boom the CSFB was the top underwriter of technology IPOs. Under star tech banker Frank Quattrone they underwrote $6.08 billion worth of IPOs on 62 separate issues. In 1999 and 2000, CSFB earned more than $700 million in fees alone for helping bring technology companies public.
It is alleged by investigators that CSFB underwriters help create a frenzy as to which favored customers would be given access to the high tech IPOs. This deceptive hype inflated the after-market price paid by individual investors. Than, just as small investors were rushing in to buy the new stocks, insiders and favored customers were selling so that the small investors suffered huge losses when the stocks collapsed. It is also alleged that certain underwriters gained profits from the IPO boom not only through the bloated fees they charged for their services in making the companies IPOs, but also by conducting kickback schemes with their favored customers.
Presently, a number of private class action lawsuits are pending against CSFB's high tech underwriters and more or filing. The suits allege that the underwriters violated federal securities laws by misrepresenting material facts not only to investors purchasing shares in the company but to regulatory bodies such as the SEC as well.
William Galvin was so disturbed by the findings of his office that he said that CSFB had engaged in "systematic fraud" and believed that its behavior may qualify for "criminal referral".
If you have experienced losses with Credit Suisse First Boston contact us to determine your legal options.
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