CSFB dealers sent on leave amid bribery probe

Two CSFB executives are under scrutiny in a US bribery probe Keystone Archive

Two Credit Suisse First Boston executives in the United States have reportedly been sent on leave amid a bribery probe. The federal authorities are investigating how shares in initial public offerings were awarded to clients, amid allegations that kickbacks were paid to dealers.

This content was published on April 20, 2001 - 16:23

The report, in the Wall Street Journal, said two senior employees, John Schmidt and Michael Grunwald, went on leave a few weeks ago, and that their absence was directly related to the probe.

The paper said their jobs involved catering to the wealthy clients of technology banker, Frank Quattrone, and that both men were involved in distributing shares in initial public offerings as part of their jobs.

The Journal said the Securities and Exchange Commission and the US attorney's office are investigating whether some investors who received shares in new issues paid unusually large commissions, and whether these constituted illegal kickbacks.

The paper quoted Schmidt's attorney as saying that his client's "conduct as part of CSFB's private client services technology group was at all times appropriate, ethical and above board".

It added that Grunwald couldn't be reached for comment and Quattrone had declined to make a statement.

CSFB is one of a number of major financial institutions suspected of flouting the law by charging inflated commissions in return for arranging the flotation of shares on the stock market.

Last December, CSFB in New York confirmed that it was under investigation in the US. It said market regulators and the examining magistrate in Manhattan had issued a formal request for documents relating to the issue of share certificates to clients.

The reports of trouble in CSFB New York are the latest in a string of scandals that have affected the Swiss banking giant.

On Thursday, the Securities and Exchange Board of India (SEBI) barred Credit Suisse First Boston (India) Securities and nine other groups from accepting new business until further notice for involvement in manipulation of Indian share prices.

SEBI said it took the action because these intermediaries were involved in price manipulation and their actions had harmed investors.

This was the first time the market watchdog has acted to punish a foreign brokerage, a SEBI official said.

CSFB's Hong Kong-based head of corporate communications, Tom Grimmer said that he was "concerned about the directive" and that CSFB was "contemplating the next course of action".

This also follows on from a scandal in Japan last year that involved a Credit Suisse subsidiary being found guilty of concealing information from the Japanese market authorities.

swissinfo with agencies

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