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CSFB to adopt 'Merrill reforms'

CSFB's chief executive, John Mack, is hoping the reforms will restore investor confidence

(Keystone Archive)

Credit Suisse First Boston (CSFB) is set to adopt measures agreed by Merrill Lynch and New York Attorney-General Eliot Spitzer to reform its stock research.

The measures include greater independence for equity analysts from the influence of investment bankers.

Merrill deal

The investment banking arm of the Credit Suisse Group made the announcement three days after the broker, Merrill Lynch, agreed to a fine of $100 million to settle accusations of conflicts of interest in equity research.

CSFB, Morgan Stanley, Salomon Smith Barney and Goldman Sachs are also under investigation for alleged conflicts of interest.

Restoring confidence

CSFB is working hard to restore public confidence after a rash of scandals that has discredited the group. It is currently under investigation for alleged misconduct in a number of countries.

In January, CSFB agreed to pay $100 million to settle charges by authorities in the United States that it mishandled the allocation of stock offerings.

"Despite the changes we have made, we recognise that there is still more that we can do to help restore investor confidence in Wall Street Research and ensure an extraordinarily high standard of independence and integrity," said CSFB chief executive, John Mack, in an internal memo.

Internal reforms

Mack confirmed that analysts' salaries would no longer be dependent on the performance of the investment banking business.

An internal committee will also be established to monitor the relationship between analysts and the rest of its business. It will also track changes in their performance ratings, Mack said.

Furthermore, a system of monitoring email between analysts and investment bankers is to be introduced.

Spitzer welcomed CSFB's measures, a spokesman said. Nevertheless, his investigation will continue.

On Wednesday, Salomon Smith Barney said it would adopt the new measures while Goldman Sachs said it would appoint an ombudsman to track its stock research.

swissinfo with agencies

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