Credit Suisse First Boston Fined $100 Million

A couple of people wrote in to note that Credit Suisse First Boston, which was the underwriter for VA Linux ^? ' IPO, has been fined $100 million for actions they took in that and other high-tech IPO's during the stock market boom. CSFB allocated shares of certain IPO's to customers who made kickbacks to CSFB. Here's their side of the story. There's also an additional statement by the regulators and CSFB's settlement agreement (PDF).

Comments

GASP!

[ekrout]

GASP! Now they're only worth $20 trillion.

Re:GASP!

[frisket]

Who gets the $10M? The state? The Justice Dept? GW Bush? And what's it used for?

///Peter

What, no disclaimer?

[Anonymous Coward]

You're not publicizing that VA/Leenucks owns j00?

That's nothing

[Anonymous Coward]

Investors were "fined" billions of dollars by these charlatans. $100M isn't even a slap on the wrist, it's more of an inside joke.

Cry me a River

[hugecyberpenis]

This is article was a little bit more informative than the previos one on Reuters (1/19). However, it still begs an important question: How can wealth "evaporate"? Wealth isn't a liquid (Like water or mecury at high temperatures) so what process does it uundergo to "evaporate"? As a former Bank manager in Austin, I was constantly asked this question by employees and my answer was always: "I don't know." That was never enough. Sometimes I would have to say it loudly: "I don't KNOW!" That often worked.

Re:Cry me a River

[Anonymous Coward]

It touched Linux. That's how it evaporated. Actually, "wealth evaporating" is probably the wrong term. More like "wealth bleeding out their venture-capitalist asses."

Re:Cry me a River

[Anonymous Coward]

1. I buy a painting at a garage sale for $10
2. I sell it to Taco for $25. I make $15, whoopee
3. He gets it appraised. Lo and behold, it turns out to be a Picasso
4. He sells it to you for $2M. He makes just under $2M
5. A few months later, your appraiser determines, conclusively, that it is a fake
6. You hold or sell the painting, which is now valued around $15 or so

1. I buy 100 shares of DOTCOM for $10
2. I sell them to Taco for $25. I make $15, whoopee
3. Lo and behold, DOTCOM is proclaimed to be the best business ever; it will crush all established businesses.
4. He sells the stock to you for $2M. He makes just under $2M
5. A few months later, the bank calls in the financing on DOTCOM. DOTCOM isn't doing so well. DOTCOM is going under.
6. You can hold or sell the shares, which is now valued around $15 or so

Re:Cry me a River

[mccalli]

However, it still begs an important question: How can wealth "evaporate"? b

Wealth measured in stock is purely a matter of belief and confidence. If everyone believes your stocks are worth something, then they will be willing to pay a price for them.

If circumstances change and confidence goes, then people no longer believe your stocks are worth anything and so no-one will pay any more. The upshot? Your wealth has evaporated.

Of course, a counter argument would be that, with stocks, you never had any wealth in the first place. You merely had the potential to try and convert paper figures into reality.

Cheers,
Ian

Re:Cry me a River

[Pravada]

Wealth doesn't evaporate. If I give you $100 for a share of stock, and then the stock falls to $1, I myself am poorer, but you are richer by an equal amount. If it goes up to $1000, and I sell, I am richer, but someone else is poorer by that amount. If I don't sell, nothing of course happens.

Re:Cry me a River

[gimpboy]

gold is considered by some to be wealth, and at high enough temperatures it to can evaporate. really though what disappeared was percieved wealth (or rather worth). the money made from this perception was spent on toys (pool tables, fast cars, nice offices, etc) which were leased. this and money spent on other services was used to employ people making things with no real definate wealth (software, website).

so, when the company goes out of business and all they have to sell is two year old hardware (we know how that depreciates), and software that can be really specific to the task at hand.

Re:Cry me a River

[Tattva]

In economics, wealth "evaporation" means a change in the multipliers of a measure of money. In a liquid economy, money gets multiplied because it is leant out to other people who use it and whoever receives it lends another portion of it out. I am using "lend" in the loosest possible sense of the word, for example, when you put money in a bank, you are "lending" it to whoever gets a loan from that bank.

When confidence dries up in enterprises that borrow money, risk is perceived to increase and people that hold assets are less likely to lend it out, decreasing liquidity. Less liquidity means less money available for investment, which is the primary negative effect on the economy as a whole when things like Enron and this IPO thingy happen.

A government can try to increase liquidity through a number of means, reducing risk by buying off bad loans so troubled banks will be more likely to lend money, issuing more currency, and buying back government bonds are a few of the tools available to governments. Many people think Japan's only way out of its current recession is to bail out its banks, many of which have a bunch of bad loans on the books and are very adverse to new loans, thus preventing GDP growth since new businesses and business expansion is driven through bank loans (as well as stock.)

Re:Cry me a River

[Breakfast Pants]

You didn't answer the question. If I buy microsoft stock at $100 and it falls to $10 that doesn't mean that $90 have disappeared. I originally bought the stock from someone so thats where the $90 went. The question posed is this: Where does money come from? Its a chicken/egg situation once you realized the entire world currency is not backed by gold.

Re:Cry me a River

[Anonymous Coward]

- Its a chicken/egg situation once you realized the entire world currency is not backed by gold.

that's right, some of it is backed by silver and platinum too ;-)

Re:Cry me a River

[Otter]

Here's a better example: you and I both buy shares at $10. I sell mine to Taco for $100. Now when you check the price of your stock, it's also $100. You've just made $90!

The next week, Taco tries to unload his stock but can only get $10 for it. Now your stock is worth $10 again. What happened to the $90 you lost? It was abstract wealth as long as you held the stock.

That's how VA's capitalization evaporated. The value of the stock declined as the owners held it.

Re:Cry me a River

[JordoCrouse]

As a former Bank manager in Austin.

If you were a former bank manager in Austin, and you didn't know how these things worked, then either you worked at a blood bank, or I should move my money somewhere else.

It all has to do with the fact that we, as a society, are willing to assign wealth to unrealized assets (unsold stocks, options, bonds, etc..). And when the value of the unrealized assets drops, we perceive a decrease in the wealth of the individual that holds them.

For example, I would guess that our good friend Bill Gates probably has somewhere in the 20 - 30 million dollar range of true assets (this would include his houses, trust funds, cars, wife's jewelry, greenbacks in his wallet, gigantic money vault in which he swims, etc..) However, we peg him at $74.645400 billion because he holds somewhere in the area of 141 million shares of Microsoft (plus holdings in other areas). So when the stock price of Microsoft tanks tommorrow morning on news of the AOL suit (from $66 down to about $60), then we would say that Gatesy-boy had "wealth evaporation" of $846 million dollars. However, he still has his houses, cars and wife's jewelry - so his assets have not changed, just his potential.

Re:Cry me a River

[King of the World]

Where does money come from? Its a chicken/egg situation once you realized the entire world currency is not backed by gold.

Strip it back to the basics and then watch it evolve. It's irrelevant that it's not backed by precious metals - they have no inate worth more than paper.

An agreement between two people requires a promisary note - very common years ago. When a pig rangler wanted to get milk from the cow herder he would exchange a promisary note - "This note is good for one pig [signed]".

The cow herder could keep the note and get a pig when he saw fit. Or he could trade the note for other goods/services.

Perhaps a man of status wouldn't trade stock, he would commit 3 squads for 3 weeks to another. The notes could be traded. In time notes were signed by the King to be worth a certain ammount. Those who didn't see value in the pieces of paper didn't involve themselves with it. Those who did see value desired the notes.

Eventually it makes sense to put numbers to your notes. Trying to exchange a note for 15 head of cattle is difficult. But 15 dollars can be broken up into it's parts.

Then Kings produced more notes. The corrupt Kings knew they couldn't cash in the value - but, back in the real world, they didn't have to. They promised more to more people and the value of a note dropped. They stopped handing out duplicate notes and the price rose. They made laws so that they were the ones who controlled this.

Simply said, money is an evolution of promisary notes. Nothing much more, nothing much less.

And believe me, I know.

Re:Cry me a River

[Dazza]

They made laws so that they were the ones who controlled this.

Not exactly. You are free to make up your own currency. These could take the form of promises of your time in return for the services of others. Or your goats. Or your grain.

Re:Cry me a River

[Anonymous Coward]

Mod this guy up to +5. As a PhD candidate in economics, I must say this is actually a rather good explanation of how money came into being.

Re:Cry me a River

[autocracy]

Wow, I never thought I'd give a lecture on economics...

The wealth DOESN'T evaporate. Stock is a medium between cash and physical assets. When you start a sole proprietorship, you invest in the business by buying things like desks and chairs and employee salaries out of your own pocket. Your return on investment (revenue-expenses=profit > /dev/pocket) is analogous to dividends. Now, move up to a partnership. Same thing basically, but multiple investors and therefore votes on how that investment is spent (ideally anyway). Next, jump to a corporation: EXACT same thing as a partnership with these mere differences: you're only limited to what you explicitly invest, you can't actually sell off what you invested in (only the holding on it, the stock - unless you get a majority of voting shares to agree), and it's possible to not have a controlling interest. That's what stock is, and yes - you needed to know it to understand what follows.

Here's where people get confused: Stocks are an asset like anything else. My computer is an easy example. I may consider it to be worth $5k, but Bob might only be willing to stick $3k for it. People, expecting a return on their investment, will be willing to pay just so much for something. Stock prices are basically the price of what people are willing to pay to buy the all the stock, just as my Linksys router is as high a price as the manufacturer can get away with. Somebody might be willing to sell me one for only $50, or I may decide to hoard as many as I can and people seeing an opportunity in this will offer it for $200, which I might be willing to pay for it. Now, what if tommorow a major unfixable bug was discovered in all the linky's that the manufacturer couldn't fix and wouldn't replace? Now nobody is willing to pay for them. I'm basically out what I spent. Now this is what almost nobody understands - I DIDN'T LOSE THAT MONEY, I spent it like I would on anything else. Whoever sold me that stock (the linky) got $X dollars. I've already lost it. It didn't evaporate, it just changed hands. Look above to understand how the supposed "value" of a stock fluctuates, but it's really nothing more than what other people value it at.

So, why do people become "broke" if they've already parted with their money? Imagine taking out a loan on your car. Because your car is an asset, you can have equity on it. No more than what other people value it at (Blue Book being the definitive guide here), but it's there. People use equity on their stocks just like they do on their car. But if you crash the car... you know what happens. Equity in a stock is just the same thing - only it's not on what you own, it's on what the business owns. Just like if I opened a convenience store and took a mortgage on the building.

Re:Cry me a River

[Anonymous Coward]

You can create wealth, and you can destroy it. Trillions of dollars worth of homes, buildings electricity grids, ships, cars etc. exist now, but didn't in the stone age. Would you assert that the stone age was therefore as wealthy as now?

Work creates wealth.

Waste destroys it.

Re:Cry me a River

[M@T]

Wealth measured in stock is purely a matter of belief and confidence.

Wealth measured in "anything" is purely a matter of belief and confidence. The only difference is that individual stocks are typically more unstable, though stocks in general are not.

Re:Cry me a River

[king_ramen]

It's called a market. The market sets the unit price (assuming all units are equal), and you can "migically" multiply the unit price set by the market times your total units to determine your total alue, but in reality this won't really work since each buy or sell will change the price slightly. If everyone sells the market drops very quickly, so becoming liquid is a big challenge for lots of these dot-commers with millions of shares.

Creating "wealth" or value is NOT the same as creating cash. Look at real estate. You buy land, people want it, it "goes up" in value, but you are none the richer in your bank. They announce your next door neighbors will be a strip club, an oil refinery, a hazmat depot, or a methadone clinic, and your "wealth" will disappear in a moment.

It is all supply and demand, but I still like the term voodoo economics...

kevin

Re: Cry me a River

[Black Parrot]

> Here's where people get confused: Stocks are an asset like anything else.

But of all the assets you could name, they are most like "pyramids".

Re:Cry me a River

[Anonymous Coward]

VA Linux is a Ponzi scheme.

ditto

Re:Cry me a River

[nelsonal]

Excelent, but the first promissary notes were issued by the goldsmiths, I believe. These smiths would let people store their gold for safe keeping, and issue a note or several that would allow the bearer to redeem the gold, soon enough a creative one realized that he didn't have to keep all the gold he owed other people on hand. He could make loans to people without keeping all the gold in stock, using gold collected in the future to repay earlier depositors. This slowly evolved into the metal backed currencies that allowed the bearer to claim a set amount of gold from the issuing government. This was useful because other countries did not accept foreign currencies, there were no foreign exchange markets. Because this led to great stockpiles of precious metals that were not useful for production. Societies gradually shifted over to non-asset backed, or fiat money. This is the foundation of our modern banking system, and is how money is created. Banks accept deposits, and make loans, however, when a loan is created, they do not usually give the borrower a suitcase full of cash, rather their account is credited with the money. Of course now the bank has a much larger deposit and can repeat the process with many more loans. The only limit on this is the reserve requirement, set by the Federal Reserve, I think it is currently at 10%. This allows banks to create 10 times as much money as their original deposits. That is how wealth is created, and why runs on even healthy banks can cause them to fail.

Re:Cry me a River

[Anonymous Coward]

So is wealth measured in money. It only has worth if some one else wants it. Ask anyone from Argentina. Money in America only seems to have inate value because so many people around the worl have so much confidence in it. But the moment they don't, watch out!

Re:Cry me a River

[bigare69]

wealth evaporates because of the illusion of value in a non-zero sum game like the stock market. During the meteoric rise of stocks wealth was created because anyone who owned them made $$ when they sold. The subsequent buyer also made $ when he sold at yet higher levels, etc. etc. The reverse (evaporation) occured when the bubble of irrational exhuberance burst in 2000. In a market like futures, by contrast, every long position is offset with a corresponding short position so it is a zero-sum game.The guy that makes $1 million off a long position in orange juice is the flip side to the guy that lost $1million with a short position in orange juice Wealth only gets redistributed not created/destroyed among winners and losers in this scenario - the zero sum game.

Re:Cry me a River

[Mr. Slippery]

How can wealth "evaporate"?

Real wealth can't. Real wealth is the goods and services people need, and the resources to produce it. It can be created (making useful stuff) or destroyed (useful stuff gets broken or wears out), but it can't just evaporate.

But we have confused wealth with currency, which is just a way to quantize and exchance wealth. A man stranded on a desert island with a million dollars in cash (physical or digital), or even a trunk full of gold, is not wealthy; he doesn't need paper or bits or shiny metal, he needs food, beer, lumber, tools, a fast 'net connection.

Currency doesn't evaporate either. But we've confused currency with speculative value - what people will pay for something based not on its usefulness, but on the price they may be able to sell it for later.

And sadly, we've based our economy on speculative value - the question is always, "how are stock prices", not "how well are the wants and needs of people being met"? The two questions have little to do with each other.

Why?

[jsimon12]

Why do the rich just get fined? Shouldn't somebody do some serious jail time for this? Or are the Swiss and those working for them immune to punishment. I mean this is no where near the buying gold boullion from Jew teeth. But this whole rich people doing whatever they want and only getting a slap on the wrist (well comparitvely, if I did something like this I would end up in prison for a long time). Who knows.

Re:Why?

[geekoid]

this is why people form corporations.
remove corporate "status" people would go to jail.
Why do you think corporations exist, to help consumers? hahaha

Re:Why?

[pthisis]

Worth keeping in mind that you can form a corporation for less than $300, which still excludes the poor but it's not just the super-rich that can exploit corporate law.

Re:Why?

[Tattva]

The more boring the crime, the less the publicly elected police, DA's, and other enforcement agents are interested in it. If you want to commit crime for profit, pick the most pervasive, boring abuse you can think of.

It reminds me of those guys who spent like $20,000 to set up a bunch of fake ATM's to grab ATM cards and PIN's. They actually lost money on their investment because the crime was so original and got so much media attention that the FBI devoted a legion of Agents to track every lead.

Re:Why?

[PsiPsiStar]

Not that I agree with this argument, but I've heard it posited that if a person isn't a danger to society, his crime should ideally be punished with fines rather than jail time since putting someone in Jail who could be creating wealth creates waste.

Of course, if these people had to take responsibility for their lilly white asses and spend their time in a real max security jail cell this shit wouldn't happen. Either that, or you'd have prison reform really quick.

Re:Why?

[Rasta Prefect]

Corporate status only sheilds you from civil liabilities. An individual in this situation would end up paying fines, the same as a corporation would. If you commit fraud as part of a corporation and you still go to jail just as easily as Bill Gates would if he hired Uncle Vinnie to go whack Larry Ellison on behalf of the Microsoft corporation. Besides, the penalty for breaking SEC regulations is almost never jail time, regardless of who you are, unless you actually commit Fraud.

Re:Why?

[Jeremi]

this is why people form corporations. remove corporate "status" people would go to jail.

Indeed. But certain corporations have enough money that almost any fine doesn't seem like much punishment for them. Perhaps there ought to be a way to send the corporation to "jail", by forcing it to cease all business operations for a set amount of time....

Re:Why?

[jafac]

If the person's fraudulent activities cause a very large company to collapse, putting thousands of people out of work, and depressing the stock market, and generally turning a national recession into a depression, and people end up starving to death over it, then they're a fucking danger to society, indirectly guilty of murder, and should be strung up by their genitals.

Re:Why?

[whirred]

Welcome to the capitalist world. If you don't like it, I suggest you start voting socialist or move. Sometimes you make money, sometimes you lose money. Economic cycles, ya know.

Re:Why?

[jsimon12]

I think you are slightly confused. The formation of corporations protects you from liability (generally from poor workmanship, shoddy products, issues with what was done, stuff like that). It does not however protect you from criminal acts. For example:

Using your company/Bank to get kickbacks and/or insider trading.

Don't you remember the Savings and Loan scandle of the 80's? People did jail time for that, maybe not the responsible people, but that is another story.

Re:Why?

[PsiPsiStar]

Well, fraud is definitly a crime and I don't think the bastards were punished enough for having committed it. Firing people or depressing the stock market is probably not a crime. Not yet anyways.

As for genitals, I doubt they have any, though if that's the case I'm not sure how they managed to screw so many of their employees. Probably hired accountants to do it.

This is pocket change...

[dperkins]

1. After what they have probably made on crooked deals.
2. After looking at the losses JP Morgan and others posted after the Enron Collapse.

The chickens are coming home to roost.

[mrsam]

I wouldn't be surprised if a few other brokerages will get nailed pretty soon, for similar kinds of shennanigans. Disclaimer: I have no direct knowledge of any regulatory investigation of ETrade, but we all know that they pretty much played the same games with RHAT.

At least with CSFB did in fact give a handful of shares to everyone who applied for the friends-in-family deal - AFAIK - while ETrade tried to come up with every excuse in the book to kick out as many people as they could in their friends-and-family program. Although some of us did eventually get our pound of flesh (see my website: E*Trouble to revisit those exciting times) it would be icing on the cake to see EGRP whacked on the balls, again.

Re:The chickens are coming home to roost.

[gayrod]

You're absolutely right. The same thing happened at the spawn of the industrial revolution -- in an effort to hop on the bandwagon, there were tons of illegal goings-on.

Now, with the technology/computer/internet revolution, history repeats itself. However, I am faithful that just like the industrial revolution, these companies will triumph over the people who were willing to overlook the law just to make a profit.

- Dave Brennins

Re:The chickens are coming home to roost.

[Zen Mastuh]

However, I am faithful that just like the industrial revolution, these companies will triumph over the people who were willing to overlook the law just to make a profit

Triumph? I think capitalism is no different from the pirate drama played out on the high seas centuries ago. These companies will all come and go, none triumphant. As long as their is money, there will be dishonesty. Not all will be caught.

Re:The chickens are coming home to roost.

[beee]

you don't know what you're talking about. that dave brennins guy is a real lawyer.

Re:The chickens are coming home to roost.

[Anonymous Coward]

Dude, your site just went over the transfer limit.

Re:The chickens are coming home to roost.

[ArnoldYabenson]

Define "real." I would hesitate a long while before hiring a lawyer who would use a construction like "Just like the Industrial revolution, these companies..." Unless maybe if I needed an immigration lawyer.

That's because...

[Anonymous Coward]

...wealth is--in the words of Timothy Leary--a consensual group hallucination. That explains its ability to evaporate. Those who believe that wealth is real (capitalists, mercantilists, politicians...) will be the sad ones when it all disappears. Anybody who understands that it is merely a hallucination will see the true richness and abundance of God's wonderful planet and be filled with joy.

Re:That's because...

[Anonymous Coward]

Those who believe that wealth is real will be the sad ones when it all disappears. Anybody who understands that it is merely a hallucination will see the true richness and abundance of God's wonderful planet and be filled with joy.

Until then, the believers will have it good and the non-believers will bitch and moan from the confines of their '63 Volkswagen Beetle.

Re:That's because...

[Tipsy McStagger]

Anyone who owns an old Volkswagen knows well how money evaporates. After owning mine for a while I understand perfectly how wealth can be here one minute and gone the next.

Not Funny...

[gayrod]

Actually I don't think this is any laughing matter. Being a lawyer, I can say from first hand experience that legal troubles, especially financial ones, are nothing to be laughing about. Especially when they involve the shady financing of businesses like VA Linux, which, if you're like me, you have your retirement savings invested in.

In short, this is a pretty grave manner and I can only hope that the companies who were involved with this one are not tainted or hurt by their under-the-table doings. It could be a fatal blow to an already hurting technology industry.

- Dave Brennins

Re:Not Funny...

[Anonymous Coward]

VA Linux, which, if you're like me, you have your retirement savings invested in

I have this strange urge to laugh and cry at the same time...

Re:Not Funny...

[gayrod]

We'll see who's laughing (or more likely, crying) when VA Linux turns profit in a few years. You know it's going to happen. Sourceforge is tha shit.

- D.B. 2K2.

Re:Not Funny...

[gimpboy]

sourceforge is indeed something special. if they can market it that will ne nice. that is unless savannah takes off.

Re:Not Funny...

[Bilestoad]

Go on, tell us what you paid per share.

Re:Not Funny...

[Afrosheen]

Is it just me, or is it hard to take a post written by "gayrod" seriously? LOL

Re:Not Funny...

[Metrollica]

Hey gimpboy, your link is wrong, go here instead.

Look at the statistics

Sourceforge:
Hosted Projects: 32,738
Registered Users: 338,498

Savannah:
Hosted Projects: 517
Registered Users: 4,176

Now tell me which one is winning

Re:Not Funny...

[Anonymous Coward]

...sayeth "Afrosheen."

Re:Not Funny...

[ArnoldYabenson]

Now tell me which one is winning

Oh a numbers game, eh? How many of these 32,738 projects have gotten to alpha? And what is the median age of these projects? How many see any activity at all?

I carry no case for either, but this "raw numbers got you beat" baby shit is got ta go.

Re:Not Funny...

[bludstone]

im sorry, but if you have ALL of your retirement savings invested in ONE company, then you are a moron.

you should know rule #1... DIVERSIFY!

Re:Not Funny...

[gimpboy]

i believe that gnu is going to use savannah to manage alot of the gnu stuff eventually. so i would think things like gcc, glibc-not to mention the basics like 'ls'- would carry more weight "importance" than alot of the stuff on sourceforge.

Re:Not Funny...

[Anonymous Coward]

go back to the glut.

Re:Not Funny...

[Anonymous Coward]

Ha-ha. Looks like when you hit 50, you'll either be clearing up shit clogged toilets or pushing around a shopping cart.

Moron. You placed all of your eggs in one basket so now you wanna bitch and whine about it. Cry me a fuckin' river.

Re:Not Funny...

[Anonymous Coward]

If you are indeed a lawyer, I hope your briefs don't include phrases like 'grave manner' when when you most likely mean 'grave matter'

Re:Not Funny...

[csbruce]

like VA Linux, which, if you're like me, you have your retirement savings invested in.

I hope you're not saying that you invested your *entire* retirement savings in VA Linux. If so, then you deserve what has happened.

Re:Not Funny...

[hetz]

There's also a flip to that coin...

How many projects have actually moved to Savannah? 517.

How many projects there are either frozen, dead, or running? who knows?

SourceForge is still with us, and despite complains, works pretty well...

Re:Not Funny...

[bryan1945]

Sucker- definition: see twit

Twit- definition: see moron

Moron- definition: see assmonkey

Assmonkey- definition see below:

"involve the shady financing of businesses like VA Linux, which, if you're like me, you have your retirement savings invested in."

Yes children, this proves lawyers are the dumbest of the lot. Repeat: Diversification. This guy is too dumb and funny for me to post as an AC. Goodbye karma!

Re:Not Funny...

[Skuld-Chan]

which, if you're like me, you have your retirement savings invested in.

we can all learn a lot from a company called enron :(.

Re:Not Funny...

[ScottKin]

I think it's abso-freakin-lutely hillarious!

Here we have the "altruistic, gregarious" Open Source community, and software developers like VA/Linux who were funded by banks & groups like CSFB, caught virtually "flagrante delicto" in corruption and scandal.

What makes me laugh even harder is the very thought that the linux-o-philes out there get to taste the "corruption" blame-game that they've been instigating against their eternal adversaries at 1 Microsoft Way in Redmond for years and years!

Welcome to REALITY, People!

Oh, the irony - the hillarious irony!

Linux - "Linux, Now I Understand Xenophobia"

I have no idea what half of that means,

[Anonymous Coward]

I have no idea what half of that means and
in the other half I understand the words, just not the way they are grouped together.

And my compiler won't compile it..

But then again English, never were my best luggage.

CSFB was fined before

[Metrollica]

1

2

3

4

And their side is gone

[Anonymous Coward]

I guess they weren't expecting so much attention to a CSFB news item :-)

But then again

[Goonie]

Say you exchange your stock certificates for some physical greenbacks. You've exchanged one collection of bits of paper for another, and, again, your "wealth" is based on the assumption that you'll be able to exchange those bits of paper for something else you want. Now, with greenbacks, that's a pretty reliable assumption, but it's not always the case with currency.

Let's go a step further and say you use your greenbacks to buy some property. Now, that property might be yours, but its worth depends entirely on what people are prepared to give you in exchange for it.

In my view, the wealth you can accumulate in the stock market is no more real or illusory than any other type of wealth. It's just *much* more volatile (and as such is risky to borrow against - margin calls and all that).

Re:But then again

[LatJoor]

True, but some wealth has a great deal more inherent value than other wealth. For example, food will always retain at least some value, because people always need it. Plus, you can always use it yourself if nobody else wants it. The same is not true for stocks.

Re:But then again

[jafac]

Food is a bad example.

In fact, there's really no good example of a commodity or security that's really a bullet-proof shelter.
for example, US farmers got raped back in the 80's as food prices failed to keep up with inflation, and the income they were counting on to pay off 10-year loans on $100,000 tractors - wasn't reliable, and they lost their farms. Granted, it was a stupid decision to take risks like that, but when you look at the pattern of the large numbers of farmers who were getting foreclosed on, it looks like something fishy was going on with the loan underwriting. That's really beside the point.

Food prices fall when there's an oversupply, which can be caused by poor planning, good weather, or unintended side effects of tax laws or changing political climates (with regard to economic sanctions, etc).

What are more reliable commodities? Precious metals are generally good. Oil used to be good, but that's because the prices were propped up by a monopolistic cartel. The Russians are fucking their asses right now. Yay Russia!
Land is almost ALWAYS a good deal - but there are factors that can sneak up on you and screw you. The value will drop out of land if there's a recession and people suddenly can't afford to pay $1 million for an 800 sq ft house anymore (San Jose, CA).

The thing that absolutely SHITS me, is - I'm relatively on the side of "free markets" and such. But when you deregulate some crucial infrastructure commodity like energy, and for whatever reason, the value of a commodity like natural gas spikes, then it's a happy good time for the commodity traders who can take advantage of it. It's a SHITTY BAD time for the poor consumers, who one month, were paying $30 to run their lights and TV, and the next month, are being billed $100, and they're suffering rolling blackouts. For some reason, I don't think it's a good idea to let the invisible hand jerk us off ALL the time. For me, it was a simple matter of realigning some of my bills for the extra cash I needed for my electric bill. For a low-income family, it meant choosing between electricity or food. What really sucks is the thousands of office buildings that were running air conditioning full blast, leaving computers and lights on at night, and the poor low-income families couldn't afford to power their refrigerator to keep their food from spoiling. These arguments seem to miss the ears of the "free market" champions.

Re:But then again

[root2]

The free market's about wealth creation.

Not wealth distribution.

Therefore, it's perfectly fine according to the tenets of the free-market that the rich get richer and the poor get poorer, as long as the total amount of wealth increases.

A purely free-market capitalistic society would be anarchistic, since there would be no need for taxes for socially beneficial services (roads, plumbing etc.) Just let the rich build their own, and the poor walk. (OTOH, one might say this has already happened in the US, as the mighty corporations have purchased the government and so the govt's actions are really those of the corporation).

You want fair treatment for the rich and poor ? Try socialism. Move to Europe. (Of course that's got its own problems, but one can't have everything ...)

Re:But then again

[nzhavok]

What you are saying is that no matter where you put your money you can never be sure it won't devaluate. This is true of course, nothing is guarenteed 100% even if it proposes it is. However when investing in stocks realise that there are two ways of investing, you can invest purely by looking at the trends in stock price ignoring what the ompany is, or you can look closely at the company; how it's structured where the cash flow comes from, fundemental elements of the business, etc. By making a sensible investment in the second way you can help to armour yourself against losses in the stockmarket (often) at the sacrifice of large and quick gains.

Re:But then again

[stephanruby]

"But when you deregulate some crucial infrastructure commodity like energy..."

Excuse-me, the industry was reregulated, not deregulated.
http://www.cato.org/electricity/electricity.html

Stephan

I smell a whore...

[bhsx]

Three of those are the exact same article, about this current fine. The last one is miniscule at best...

In May 1999 Swedish authorities fined Credit Suisse First Boston 2 million Swedish kronar because of an attempt by the Flaming Ferraris group of traders to manipulate the Swedish stock market index.

How about the clients that made the money?

[Great_Geek]

Okay, so they (finally) nailed CSFB. How about the other side of that transaction? All those clients that made all those millions - they just live happily after? From the news releases, CSFB was stupid enough to keep records in nice spreadsheets, so it should be easy to identify and fine the clients too.

The cynical view says it won't happen - the brokers like to keep the clients happy.

The funny thing is ...

[cweber]

that according to their own article CSFB does not admit any wrongdoing in their letters of acceptance to the SEC and NASD (as is usual in such settlements). Further down in their own article, however, they state that they have fired, fined, suspended, redeployed or otherwise disciplined employees involved in this IPO thingy. If that is not an admission of guilt, then what is???

Corporations have such wierd ways of doing things...

Re:The funny thing is ...

[Peyna]

Not exactly an admission of guilt. More of a "nolo contendo" or whatever.

When I get a traffic ticket, I can sign 1 of 3 spots on the back, either admitting guilt and paying the fine, pleading no content, and paying the fine (thus, paying the fine, but not admittin guilt.) or pleading innocence.

I see what they have done there along the same lines.

Re:The funny thing is ...

[Anonymous Coward]

Sorry for the typo, that should be "no contest", not "no content".

Re:The funny thing is ...

[ErikTheRed]

Yeah, but when you pay the fine on a ticket, it's a couple bucks and they jack your insurance some. We're talking US$100,000,000 here.

I can't exactly see a bunch of suits smoking fat cigars in the boardroom going "Yeah, yeah, it's only a hundred mil. Sign the back of the motherfucker and send it in."

Re:The funny thing is ...

[SuiteSisterMary]

Sure, why not? Just jack the fees to the clients a little bit, and you'll recoup it in no time.

Re:The funny thing is ...

[Alsee]

Just jack the fees to the clients a little bit, and you'll recoup it in no time.

Heay! I just had an amazing idea!

Don't commit a crime, don't get fined, but still jack the fees to the clients! You'll make a FORTUNE!

-

It's a civil matter, not criminal

[mr_death]

Why do the rich just get fined?

Because the "charge" involved a violation of SEC and NASD regulations, not a criminal charge (e.g., Murder.) The $100m is a combination of "disgorged profits" (you have to love the legalese) and a fine.

This has nothing to do with "the Swiss" -- CSFB is a multinational.

And who is surprised?

[f00zbll]

Really, for how many years have those of privledge misused their position to screw the poor just a bit more. Sure the stock brockers made a little money, the company made a lot of money and the rich made some nice play money. That 100million dollar fine is only for appearances, so chalk it up to the rich get richer and the poor get the shaft.

The only gold rush is the rush to screw the poor.

Re:And who is surprised?

[GigsVT]

If the "poor" were day trading IPOs then they deserved it.

Your idea of poor and my idea of poor are obviously very very different.

Re:And who is surprised?

[f00zbll]

I consider multimillionaires rich and those who actually have to work to pay bills poor.

If the "poor" were day trading IPOs then they deserved it.

I consider those foolish. Any person got burned day trading let their own greed get the best of them. The people who made out are investors with millions in their portfolio. Most trading firms allow their "biggest" investor to jump in on hot deals. I know a few people (2) who are worth over 200 million and have the ability to buy two 800K dollar houses with cash. For some one like that, throwing down 1-2 million really is pocket change. The company did get screwed and so did a lot of other people. Money is the grease in the gears of greed :)

Didn't bribe officials like SBC did

[bstadil]

These guys do not know how to play the political corruption game as does SBC. SBC flat asses lied but got a small $6m fine plus got to keep the loot.

Wall Street Shenanigans

[solman]

The extraordinary thing about this is how lightly CSFB (and the street as a whole) is getting off. The profits from inappropriate IPO allocations alone substantially exceeded the penalties.

No penalties will ever be assessed against the hundreds of analysts who hyped internet stocks in exchange for those companies giving their firms a slice of the investment banking business.

Ask any analyst from any wall street firm, sell side or buy side, and they will tell you that everybody does this. Compare the SEC's treatment of big firms doing outwardly crooked things to their treatment of the little guy.

It looks like they're too busy busting 15-year olds to attack the real stock manipulators.

Well, at least someone made money on the .com boom

[autopr0n]

Heh, of course all those people that CSFB gave easy shares to probably lost a ton of money (although one could argue that someone so well connected in the financial world would know to get out while the gettin's good. But a lot of people on wallstreet were pretty stupid about that kind of thing)

I wonder how long the investigation into this has been going on anyway? It seems a lot of irregularities are cropping up now that a lot of these companies are defunked (I.E. Enron). I guess when you have a lot of fake money in the form of overvalued stocks you can afford to cover things like this up, but when that dries up your fucked.

But then again, it seems people ought to be more pissed off if the stocks actually turned out to be, you know, worth something

More shredded documents?

[LM741N]

And in related news Acme Mobile Shredding stock has quadrupled in the last year. Says CEO Mike Flimflamigan, "...I hate to make so much money off of other peoples' misery, but its the American Way TM"

Re:More shredded documents?

[Anonymous Coward]

I hate to dispel your ignorance, but Credit Suisse First Boston is a *Swiss* company. As in "Swiss bank". First Boston is really only a subsidary. So, no, not all large corporations are American...

(btw - they aren't the largest Swiss bank either, that would be UBS)

Dot com

[BluedemonX]

Ever heard the expression "Boston Wad" or "Pigeon Drop?" It's a con game where you get a roll of dollars, then add a fifty to the top. Wrap with elastic band.

Then you find your mark, and agree to go drinking. Show him the huge wad of "fifties". Drop it (with him in tow) in a locker or safety deposit box and keep the key.

Later on in the evening, get a phone call/page or something telling you to get out of town or whatever. (This works really well if both of you are dopers/criminal element) Suggest to your new friend that you need to boot out of town and could he grab you $400 from the ATM for bus fare, etc? He's totally entitled to keep the $1000 in the locker - you haven't time to get it and get out of town and are willing to eat the loss in order to save your neck.

You get the $400 and split. Your "friend" finds out his wad was worth $75 or so.

Dotcoms were pigeon drops. Legal ones. "Oh, uh, yeah, this stock's going to be the next Microsoft. Want mine for $100 a share? I made enough money on it having bought in at $3 a share!"

please do not moderate this up

[autopr0n]

This "gayrod" guy is an idiot troll. The domain name in his 'sig' dosn't even point to anything.

I mean, slashdot dosn't need to make itself look completly stupid

Re:please do not moderate this up

[PhilHibbs]

Serves you all right for listening to someone with a /.id > 5000.

On that note, when will ESR step up and write...

[Anonymous Coward]

..."Even More Surprised By Poverty", his sequel to the much-ballyhooed "Surprised by Wealth"- an account of his candid feelings on being worth $36 million-ish after the VA Linux IPO?

A back-of-the-napkin calculation shows that $36M to now be $350K. Of course, to be fair, that still ain't exactly hurting. But yeesh, hindsight makes "Surprised By Wealth" one seriously painful read...

And even richer a read, given CSFB's plight, is the ZDNet article on the subject of ESR's fortune, which, with unintended irony, observes:

"Some open-source developers are envious of those whose work has brought them wealth. Some who could have made money from the recent VA Linux IPO weren't able to because they didn't have enough money or connections to get onboard the VA Linux IPO bandwagon.

The age-old question of the open-source community has been: "How do we make money at this?" That question, at least for some developers, has now been answered..."

Yeah. It's been answered alright.

CSFB has a LONG history of blunders...

[JohnA]

CSFB has a LONG history of blunders, the least of which is their sub-standard analysis department.

Check out their calls... they even rated Enron a "Strong Buy" when the stock was near its all time high.

While all of the Wall Street houses seem to have skeletons in their closet, CSFB seems to be unable to hide theirs well...

Re:CSFB has a LONG history of blunders...

[JordoCrouse]

they even rated Enron a "Strong Buy" when the stock was near its all time high.

To be fair, everybody rated Enron as a Strong Buy, because there were no indications that the Enron executives were such a bunch of evil folks.

Re:CSFB has a LONG history of blunders...

[Jeffrey Baker]

These analysts are called in the business "the sell side". They are not analyzing stocks, they are selling them. Their job is to make every stock appear at least somewhat attractive, so their firm can make a load off people buying and selling it. A neutral rating of "hold" from the sell side really means "this company is worth 1.6 bags of dog shit." A rating of "sell" is extremely rare for most of the bigger houses. To get a rating of "sell", you are usually indicted in some criminal conspiracy, or your stock is already at record lows.

Re:CSFB has a LONG history of blunders...

[nojomofo]

Right. When you're buying a house, you don't take the seller's word on what kind of shape it's in, you have it inspected by somebody on your side. And when you're buying stock, you shouldn't take the word of the seller (or in this case, their agents) how much it's worth....

Re:VA Software is dying!

[ArnoldYabenson]

I apologize for the moderator who called this post flamebait. No one is going to flame you here. Cmdr Taco Loves You And Only Wants You To Be Happy. Happiness Is Being On Topic. The Topics Are Determined By The Editors. Are you beginning to understand?

There, there.

In on LNUX

[Anonymous Coward]

Got in on LNUX and flipped in the first 20 minutes of trading or so, making a greater return on my investment then I thought possible.

With that kind of money floating around no suprise everyong got corrupted, these guys were literally printing money. Rather than trade on what I felt were the sickest commissions I had ever seen I promptly withdrew my money. Now I've got an idea why the comissions were so high, at first I thought it might just be what you paid for high end service, honestly.

It struck me at the time that the rich folks playing the markets at those rates couldn't be honestly trying to make money, but of course they had it figured out with the guys on the other side and were making armloads.

In fairness to boston, they didn't try and rip me off and were prompt and friendly on the phone. That contrasts DRAMATICALLY with a number of the internet only folks out there.

Not really needed

[autopr0n]

I think most people know that VALinux (or is it VAsoftware now?) owns Slashdot. And for those who don't know I don't really think it's that relevant in this case. This has to do with CSFB's underhandedness with VA stock, not something VA did itself.

Re:Not really needed

[sql*kitten]

I think most people know that VALinux (or is it VAsoftware now?) owns Slashdot. And for those who don't know I don't really think it's that relevant in this case. This has to do with CSFB's underhandedness with VA stock, not something VA did itself

Even so. On CNN, for example, every time they report on anything that's owned by AOL/TW, they make sure they say, XYZ Corp is owned by AOL/TW, parent company of CNN. You have to whiter than white in cases like this, to be completely safe, if you do anything that might affect the stock price. I'd like to think this was just an oversight on /.'s part, but it's a little odd to be reporting on a market irregularity and not conform perfectly yourself.

"disciplined"

[jafac]

"Yes, we sent him a strongly-worded email reminding him that it was against company policy, and that further transgressions may impact his next quarterly bonus."

va linux = free $

[Anonymous Coward]

Haha, all these guys do is give out free money. I got a few IPO shares then dumped them like a rock the next day at a sick profit. Now I wonder if this lawsuit means additional compensation. I love this company.

Paying the fine

[DennisZeMenace]

Can they pay the 100 millions in VA/Linux shares ?

DZM

Because it didn't exist in the first place

[autopr0n]

Most of those dot.bombs (I hate typing it that way, what are you supposed to say "dot dot bombs"?) had pretty ridiculous business models, and a lot of those that had sound ones behaved pretty stupidly, thinking that this was the vaunted 'new economy' and all that.

So in other words, people believed that the service that they were providing was valuable, but it turns out no one wanted it. The wealth they thought they had, well, they didn't.

Thats Close To the Capitilization

[quakeaddict]

Thats Close To the Capitilization of LNUX.

http://finance.yahoo.com/q?s=lnux&d=t

But thats right, there are no real viable Linux based companies anymore, and their really never were.

Re:Thats Close To the Capitilization

[GigsVT]

RHAT is very viable, not bleeding money, and actually not cooking their books in any serious way.

They have a huge market cap, due to the staggering number of outstanding shares, but in all, they exploited their high stock price in a very intelligent way with their secondary offering, instead of buying tons of worthless companies with their inflated stock. Now they have a ton of cash to sit on, and even though they paid a lot for some companies, and they are still charging that off in large chunks, their pro forma earnings are pretty close to true earnings.

If thier stock goes up enough to see massive employee options exercising, then there might be an additional dilution issue, but as long as they stay below $10 a share for a while, they will be in a healthy position with a sane stock price, and a winning business plan.

Disclaimer: I own some RHAT shares.

Re:Thats Close To the Capitilization

[GigsVT]

Red Hat's Market Cap is 1.259B at the end of business today. That is not huge.

It is, considering their revenues.

As for the "tons of cash they have to sit on", it can best be described as: $68M. If they continue to burn -15M per quarter (which is generous, considering the previous three quarters they lost -55M, -27M, and -34M)

You keep referring to the amortization of goodwill as a loss. It isn't. Goodwill is a worthless asset on the balance sheet. The one time charges that RHAT is taking are not of dubious nature like the Cisco inventory write-down, RHAT's one times are "money" that was spent a long time ago (It wasn't really money, only in the opportunity cost sense).

Returning 0.01 per share isn't much of an achievement is it? On an investment of $1000 (~100 shares right now) you'd get $1 per quarter ($4 a year). After paying capital gains you and the wife might be able to split a diet coke at the local soda fountain.

Do you even understand how the stock market works?

Oh, I see by your later paragraphs. You are a microsoftie. I guess that allows you to totally disregard the way accounting and the stock market works.

Re:Thats Close To the Capitilization

[GigsVT]

First off, you talk about dividends, and yet MSFT has NEVER ONCE paid a dividend.

You implied earlier that somehow earnings were automatically distributed as dividends, this shows a clear ignorance of the stock market, or if that isn't the case, then a twisting of the facts to confuse those less familiar with the stock market that might fall for your ruse.

Second, I never said RHAT was "great stock" per se. I was only originally responding to the original post that said there were "no viable Linux companies".

I'm not promoting anything. I'm just pointing out some facts.

A lot of your numbers are just wrong. RHAT has 63 cents per share in cash, with about 169 million shares outstanding. This is about 106 million dollars in cash.

This is all irrelevant though. RHAT is putting itself in a position where they will be rolling in the money. They aren't in direct competition with MSFT at all, the are more in competition with Sun, and other Unix vendors.

RHAT concentrates on legacy UNIX->Linux conversions. MS can continue to push their toy products for home DSL users to use, and it won't affect the people that need real servers, and it won't matter to RHAT either.

Re:Thats Close To the Capitilization

[GigsVT]

IBM wants to work with RHAT, not against them.

Oh, and name the declaration date of a single MSFT dividend, if my statement is so patently false.

A real cash dividend, not a stock split (which is not a disbursement of any sort).

Maybe this will help you.

Please...

[Anomaly Coward]

This might be redundant, as I'm sure I won't be the first to say this, but, throw these assholes in prison! And not the minimum-security polo-at-9:00-lattes-at-2:30 prison - the meeting-with-Bubba-and-a-stick-in-the-washroom prison. I'm tired of all these crooked executives getting off with light slaps on the wrist. If any of us peons ever stole that much money we'd never see the light of day again, much less get to keep the money.

Why do I get the distinct impression that no one at Enron or Andersen is going to get punished either (with the possible exception of a low-ranking scapegoat or two)?

Re:Please...

[Silver222]

I can agree with your sentiment, but I can't share your conviction that being raped in prision is appropriate punishment. Why not just really bitchslap the company and give the fine some teeth?Say like 100% of their revenue last year.

From personal experience

[Anonymous Coward]

I can say that my impression of the dot com boom was that it was of dubious legality. Having worked for a start-up web development/marketing/we-can-do-anything-and-every thing firm, I saw blatant manipulation of stock prices via public stock trading message boards and outright lies regarding profits by the CEO (he said there were some when in fact the company was bleeding red ink.)

The company I worked for had some strange affiliations, from the seemingly normal to the questionable to the downright shady (a Las Vegas land development company whose name I thankfully forget :) ).

I saw quite a bit there...the VP dumping his options just days before the stock crashed, unqualified people getting paid a lot of money to do nothing (myself included), and of course massive document shredding in the accounting office.

Of course, my views on this might be slightly skewed, this all occuring in the stock market scam capital of the Western world...

AC for obvious reasons.

Re:From personal experience

[Anonymous Coward]

Hmmmm - you wouldn't be talking about the HP acquisition of Compaq now, would you? That would be even funnier if it weren't for the fact that thousands of experienced professionals will be losing their jobs because of one incompetent fast-talking bitch that's so bad she couldn't even manage Lucent properly.

Re:RHAT

[GigsVT]

One thing that would be interesting is to see how the RHAT case gets settled. The RHAT case was different because RHAT itself was named as the defendant in the suits, not their brokerages. It never made any sense to me to sue a company over what their brokerages did, and apparently it didn't to Red Hat either, they responded to the suit publicly by saying that they had retained the world's leading brokerages, and had no knowledge of anything illegal going on. Sounds like a pretty solid defense to me.

Re:On that note, when will ESR step up and write..

[Will Dyson]

While ..."Even More Surprised By Poverty" would be part of a good title for an Onion story, it actually doesn't really fly. Seems to me that ESR was entirely realistic about the fact that stock isn't worth anything untill you actually sell it.

Me Me Me

[JoshNarins]

Ken Lay should be poor for life.

Let the poonishment fit the crime.

This wouldn't have happened...

[acoustix]

if EVERYBODY were allowed to participate with an IPO.

For some reason only "privilidged" people are allowed to buy the stock before it starts. So why do we allow the rich to get richer? Everybody should be able to buy those stocks before trading starts.

No exceptions.

Re:This wouldn't have happened...

[dzawitz]

Do you understand what stocks are, and what an IPO is? A company is only legally allowed to sell a certain number of shares, and usually offers less than that as their initial offering...allowing everyone and their moms to buy the shares is stupid, because there's a limited number of shares to go around. That's why IPOs used to go up their first day, because more people wanted the shares than there were shares to go around.

Jesus...

Re:This wouldn't have happened...

[acoustix]

Do you understand what stocks are, and what an IPO is?

Do you know how to read?

No where did I say that there should be an unlimited number of stocks to buy. I said that everyone should be given the chance to buy - first come first served. Why should only a select few be able to get in on the ground floor? Everybody should be given that chance.

Re:This wouldn't have happened...

[rhavyn]

Everyone is. The day of the IPO, the stock opens on the market at that price. There have been IPO's where the stock went down on the first day. The fact that someone doesn't manage to buy the stock at that price goes up is just too bad. That's how the stock market works. If everyone got to preorder IPO shares at that price, then the price would never move on the stock, thus defeating the purpose of the stock market.

Re:This wouldn't have happened...

[tswinzig]

For some reason only "privilidged" people are allowed to buy the stock before it starts. So why do we allow the rich to get richer? Everybody should be able to buy those stocks before trading starts.

No exceptions.

Believe me, the companies would love it if everybody could get in on the IPO at the same time, before the bell starts. Because what would really happen is everyone with a broker would place their bets before the stock 'prices.' Then the firms would raise their opening amount to what they think everyone would be willing to pay. The more people bidding, the more it goes up. Then those companies would actually profit from the huge upward swings that have accompanied these IPO's, instead of the initial buyers profiting from them.

IPO's are handled the way they are, because most of the stock being bought is held by large organizations that will NOT sell them on the open market for a while. The investment firms set this up so that they can keep the stock price stable. But there's always those that get in on the IPO and flip the stock anyway, and that's why the opening days can be crazy for the price.

LNUX got screwed too.

[jmorse]

Actually, the company got screwed too. When you have an IPO, only the proceeds from the *initial* sale of shares goes the the company going public. When an IPO skyrockets on its first day of trading, it leaves money on the table. VA went public at $30 and closed at $299 the first day. That means that it probably could have gone public for $250 per share or so and gotten roughly 14 times the amount of capital they got. Since VA sold 4,400,000 shares in its IPO, that's $968,000,000 that went to CSFB's big institutional account holders instead of the company.

I think slashdot could survive a while on $1Bn cash, don't you?

To sum up: the company got screwed because it was denied a fair and rational IPO price.

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Re:RHAT

[Danny Rathjens]

The RHAT class action suit is not just about the kickbacks for IPO stock(misbehaviour of brokerage) as this one is.
It is also the standard "sue the management when the stock goes down" lawsuit(false expectations, etc.)
It also claims that RHAT promised a certain amount of shares for the open source community and did not fulfill it.
There were a few more points to the lawsuit, but I forgot them and I apparently threw out the paper.

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Awwww, shucks!

[ScottKin]

Gee, I wonder if the Linux-o-philes out there will whitewash VA/Linux's (as well as other "Open Source" product companies) involvement in these financial shenanigans, or come to the realization that their so-called altruistic software purveyors are just as much a bunch of stinking, corrupt money-grubbers/bottom-feeders as the rest of the "business world".

Linux - "Linus, I Now Understand Xenophobia!"

Re:On that note, when will ESR step up and write..

[Turing Machine]

A back-of-the-napkin calculation shows that $36M to now be $350K.

You're assuming that ESR wasn't smart enough to dump at least part of the stock when the 6 month waiting period was over. He doesn't strike me as being that stupid. Even though it had declined to the $50 range from its ~$250 height, his stock still would've been worth $7 million or so.

Give me a break!

[Newer Guy]

"During one quarter alone, these inflated commissions on profit-sharing trades accounted for over 22 percent of CSFB's commission revenue". A 100 million dollar fine for this? Give me a break! CSFB made BILLIONS from this! This isn't even a slap on the wrist for them. It's like saying: Okay Joe, you robbed a bank of $100,000...and for that we're fining you $1.00! Until these crooked firms REALLY GET PUNISHED for their crimes, there's simply no incentive for them to BE HONEST! Who says crime doesn't pay? Apparently if you're big enough of rich enough it certainly does!

I agree completely

[dnoyeb]

Of course slavery was also a product of "Rich" people. Its the rich who have historically screwed over the rest of the world. One day people will wake up and realize the only difference that counts is money. Yea, capitalism works, just not for those who are working... I signed up with CSFB 2 weeks ago, but I dont see how this will affect me since Im not doing IPOs.

It's UNREALIZED gain/loss

[Anonymous Coward]

If you look at it from an accounting perspective you do lose that money. You own 10 shares of stockX at $10 a share. You have assets in value of $100. If the stock price drops to $5, you have assets in value of now $50. You have an UNREALIZED loss of $50. If you sell the stock at $5, then the loss becomes REALIZED.
Similarly, if the stock were to rise in value, say to $15, then your unrealized gains would be $50.
Just because the money has exchanged hands doesn't mean that you have lost it. You received an asset for it. If the asset's value changes then you are losing or gaining wealth.

JK

Re:It's UNREALIZED gain/loss

[autocracy]

Yup, that's true. I'm sure I fudged my explanation a bit (late at night and typing a small essay), but you're correct. However, I find that most people don't get that. When you getting into anything of that magnitude people just look at you and go "huh?" So I avoided saying that directly.

Fines to the offender

[arete]

If the principle PEOPLE all got PERSONALLY fined, I still think this would happen a lot less.

Jail time vs fines and corporate vs personal punishments for wrongdoing are not really the same issue.

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Thursday's Frontline is all about this

[Sloppy]

Watch some TV.