CSFB Ceases Use of eMail
Compliance Issue Solved
In a move to thwart an investigation by Massachusetts securities regulators, investment bank Credit Suisse First Boston has abandoned the use of email in the firm. "We've found that often the use of so-called email has resulted in some of our employees being caught-up in so-called scandals," said CSFB CEO John Mack. "Frankly, if it weren't for the email, no one would have been the wiser. Or at least they wouldn't have been caught. So the email thing has just got to go."
At the heart of the matter is an email dated Nov. 6, 2000 from CSFB managing director Frank Quattrone to analyst Brent Thill around the coverage of Agile Software. In his email, Mr. Quattrone asks the analyst "what have we extracted from on banking side to get this coverage?".
William Galvin, the state's Secretary of the Commonwealth and Chief Do-Gooder, claims these emails are a "smoking gun" showing attempted coercion. "I think these emails are a 'smoking gun'" he said, "they may even show attempted coercion." Galvin went on to say that the word "extracted" was particularly troublesome. "Why did he use that word? Why not 'derive' or 'obtain?' And also, why is there no use of a pronoun in front of 'banking side?' Clearly Mr. Quattrone never had the benefit of a proper Harvard education."
Not surprisingly, CSFB is now on the defensive, playing down the possible conflict of interest as they negotiate a $250 million global settlement with state and federal regulators. According to CSFB spokesman Tyrone Shoes, chairman of the company's committe for ethics and office parking, Thill and Quattrone were engaging in friendly banter and nothing more. "This was certainly not a case of attempting to coerce business," Shoes stated. "Frank was really just asking Brent if he was 'getting any'. Brent might have pressed to get a little under-the-covers briefing with Agile's marketing VP, but that was about it. From what I've heard she was pretty hot. And besides, these guys work hard. They deserve to let off a little steam now and then."
Agile, who had undertaken their 1999 IPO with CSFB rival Morgan Stanley, did not end up doing any banking business with CSFB. "If we were using coercion as a way of business, we weren't very good at it," Shoes added. "Frankly, we would have fired Thill long ago with this kind of performance record." Mr Thill could not be reached for comment as he was terminated from the firm in early 2001.
According to insiders close to the company, CSFB is moving towards a more fool-proof communication system to manage the risk of potential conflict of interest between the banking side and the research side of the company. "Eway eakspay inhay odecay," said an anonymous source.
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