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

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

CSFB was fined before

[Metrollica]

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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.

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 ...

[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."

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: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.

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.