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CSFB to pay $100M in fines
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January 22, 2002: 1:38 p.m. ET
Fines conclude probe of allocation of hot IPOs from April '99 to June '00.
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NEW YORK (CNN/Money) - Credit Suisse First Boston Corp. was hit with censure and $100 million in fines for taking millions of dollars from customers in inflated commissions in exchange for allocations of "hot" initial public offerings.
Fines of $50 million each will be paid to the Securities and Exchange Commission and NASD Regulation, the enforcement arm of the National Association of Securities Dealers, which also owns and operates the Nasdaq exchange. The amount of the fine has been widely expected for several weeks. The misconduct occurred between April 1999 and June 2000, according to NASD Regulation.
"This conduct was a blatant disregard of NASD rules and a serious breach of a firm's responsibility not to exploit its position as an underwriter," said a statement from NASD Regulation President Mary Schapiro. "CSFB's behavior undermines the integrity of the capital-raising process which is essential to the health of our economy, and shakes the faith of investors in the fairness of the markets."
CSFB, a unit of Zurich-based Credit Suisse Group (CSR: down $0.87 to $41.68, Research, Estimates), issued a statement saying that it agreed to the fines without admitting or denying any of the allegations made by regulators.
It said the problems were the work of employees of CSFB, not the brokerage firm itself. It said that three employees in its San Francisco office were terminated last June, and that other employees have been fined, suspended without pay, suspended from supervisory responsibilities or suspended from the IPO allocation process. It has also set up an independent consultant to review the IPO allocation process.
"It should be noted that neither the SEC nor NASD made any allegations or findings of fraudulent conduct by CSFB," said the firm's statement. "Further, neither the SEC nor NASD alleged that any IPO prospectus was rendered false or misleading by CSFB's conduct or that this conduct affected either the offering price of an IPO or the price at which any IPO stock traded in the aftermarket." 
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