Credit Suisse details allegations against CSFB unit

Credit Suisse Group faces problems at its CSFB operation in the United States Keystone

Credit Suisse Group has detailed allegations against its investment banking arm Credit Suisse First Boston (CSFB) related to the handling of hot US share offerings in the market boom which fizzled early last year.

In a regulatory filing tied to the listing of its shares in the United States, Credit Suisse Group, which also runs Switzerland’s second biggest domestic bank, said that the allegations CSFB were facing included its handling of shares in VA Linux, the software specialist whose shares rocketed on their debut in December 1999.

Credit Suisse said that CSFB was cooperating with the US authorities in the investigations, which also involves several other US investment banks.

“CSFB Corp intends to defend itself vigorously against all the claims asserted in these and other related matters,” said the Credit Suisse group.

US probes Wall Street firms

US probes Wall Street firms

Credit Suisse’s filing noted that several US authorities are investigating how Wall Street firms including CSFB allocated IPO stock to investors, especially in 1999 and 2000, when demand for hot stock offerings sent shares soaring on their debut.

In part responding to the investigations, Credit Suisse in July hired Wall Street veteran John Mack as head of CSFB to lead a reorganisation of the firm and tighten controls.

Credit Suisse said, starting in January 2001 a large number of class action suits were filed in US federal courts against several firms, alleging violation of antitrust laws in connection with IPO allocations.

The group said inquiries relating to CSFB focused on two IPOs, including one for Linux. It said suits alleged the registration and prospectus misrepresented information about commissions paid to CSFB by some customers who received IPO allocations, in connection with “subsequent security transactions”.

Credit Suisse Group was also under a cloud in Britain after the financial authorities there fined Winterthur Life UK, a subsidiary of the Credit Suisse Group, £500,000 (SFr1.16 million) for failing to meet guidelines on the sale of mortgage policies.

The Financial Services Authority said in a statement on Tuesday that Winterthur had not provided customers with clear explanations and had not adequately checked its computerised sale system.

swissinfo with agencies