2003-04-28 sec-litreleases pdf 14 KB 3,655 chars

SEC v. : 03 Civ. 2946 (WHP)

Exhibit of Federal Court Approves Settlement of SEC Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking
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summary

Credit Suisse First Boston LLC settled SEC securities fraud charges related to biased research on tech stocks like Synopsys and Winstar, paying $100 million to create a distribution fund compensating investors who bought specified equities during defined periods between 1999 and 2001, with no admission of guilt or criminal charges filed.

paragraph

In 2003, Credit Suisse First Boston LLC agreed to a $100 million federal payment to settle SEC charges of securities fraud stemming from improper research practices and misleading analyst recommendations on technology stocks during the late 1990s and early 2000s. The U.S. District Court for the Southern District of New York ordered the creation of a Distribution Fund from this payment, plus interest, to compensate investors who purchased seven specific equities—including Agilent, Synopsys, and Winstar—during court-defined purchase windows between July 1999 and December 2001. The court explicitly stated that the identified securities and time periods were for administrative purposes only and did not constitute a judicial finding of wrongdoing, and no criminal charges were brought against the firm.

narrative

Credit Suisse First Boston LLC (CSFB) resolved SEC allegations of securities fraud related to biased research and misleading analyst recommendations on technology stocks during the late 1990s and early 2000s through a civil settlement in 2003. As part of the resolution, CSFB paid a $100 million federal payment, which formed the core of a Distribution Fund, augmented by any interest earned, to compensate investors harmed by the alleged misconduct. The U.S. District Court for the Southern District of New York issued an order on October 31, 2003, identifying seven equity securities—Agilent Technologies, Digital Impact, New Power Holdings, Numerical Technologies, Synopsys, and Winstar Communications—and their respective purchase periods between July 1999 and December 2001 as eligible for restitution. The court emphasized that this listing was solely for administrative purposes and did not constitute a judicial or regulatory finding of liability. The Distribution Fund Administrator was tasked with designing and implementing an equitable, cost-effective plan to distribute funds to eligible investors who purchased these securities during the specified windows. No criminal charges were filed, and the settlement was structured under the SEC’s civil enforcement authority. The resolution aimed to restore investor confidence and provide redress without admitting fault, reflecting a broader industry-wide crackdown on conflicts of interest in investment banking research during that era.

Enriched metadata

Scheme
broker-dealer-fraud (95%)
Court
Southern District of New York
Classified broker-dealer-fraud(confidence 95%). EDGAR detection: forms Form D· recall 29% / precision 9%. detection rule →
Parties
Securities and Exchange CommissionCredit Suisse First Boston LLC
Keywords
distribution fundequity securitiessecurities questionquestion relevantdistributionfundcredit suissesuisse bostonfund planfinalsecuritiesequityrelevant periodperiod purchaseinc

Extracted insights

Entities 4
  • organization Court
  • organization Credit Suisse First Boston LLC
  • agency Securities and Exchange Commission
  • organization Securities and Exchange Commission
Triples 10
  • SECURITIES AND EXCHANGE COMMISSION filed against CREDIT SUISSE FIRST BOSTON LLC
  • CREDIT SUISSE FIRST BOSTON LLC made federal payment to form Distribution Fund
  • Distribution Fund Administrator formulated and administered Distribution Fund Plan
  • Eligible Distribution Fund Recipients purchased equity securities in question during relevant periods
  • Court identified Agilent Technologies, Inc. as equity security with purchase period July 21, 2000 – Feb. 20, 2001
  • Court identified Digital Impact, Inc. as equity security with purchase period July 23, 2001 – Oct. 2, 2001
  • Court identified New Power Holdings, Inc. as equity security with purchase period Oct. 30, 2000 – Dec. 31, 2001
  • Court identified Numerical Technologies, Inc. as equity security with purchase period May 4, 2000 – Aug. 2, 2000
  • Court identified Synopsys, Inc. as equity security with purchase periods July 23, 1999 – March 12, 2000 and May 1, 2000 – June 29, 2000
  • Court identified Winstar Communications, Inc. as equity security with purchase period Jan. 5, 2001 – April 5, 2001
PDF
SEC v. : 03 Civ. 2946 (WHP) · Source
Text layers
Extracted body text (3,655c) 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________ 
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 
                                                Plaintiff,                                    :            Civil            Action            No.            
        : 
                        -against-                                                            :            03            Civ.            2946            (WHP)            
        : 
CREDIT SUISSE FIRST BOSTON LLC, F/K/A   : 
CREDIT SUISSE FIRST BOSTON CORPORATION,   : 
        : 
    Defendant.   : 
________________________________________________: 
 
ORDER REGARDING DISTRIBUTION FUND PLAN
 
 
 On October 31, 2003, the Court signed a Final Judgment as to Defendant Credit Suisse 
First Boston LLC, f/k/a Credit Suisse First Boston Corporation (“Final Judgment”).  Section II of 
the Final Judgment calls for the creation of a Distribution Fund, which consists of Defendant’s 
Federal Payment plus any income and interest earned thereon.
1
  Under Section V.A of the Final 
Judgment, “[t]he Distribution Fund Administrator shall formulate and administer a Distribution 
Fund Plan ... intended to provide for the equitable, cost-effective distribution of funds to Eligible 
Distribution Fund Recipients.”  Under Section V.C.1 of the Final Judgment, to be an Eligible 
Distribution Fund Recipient, a person must have purchased “equity securities in question” 
through Defendant during the “relevant period of purchase.”  Also under Section V.C.1, 
“[i]dentification of the ‘equity securities in question’ and the ‘relevant period of purchase’ for 
each such equity security will be set forth (solely for the purpose of administering the 
Distribution Fund Plan) in a further order of the Court.” 
                                                
 
1
 All defined terms in the Final Judgment apply to this Order. 

 Accordingly, IT IS HEREBY ORDERED that the “equity securities in question” and the 
“relevant period of purchase” for each such equity security, as those terms are used in Section 
V.C.1 of the Final Judgment, are as follows: 
 
Equity Securities in Question   Relevant Periods of Purchase  
 Agilent Technologies, Inc.   July 21, 2000 – Feb. 20, 2001 
 Digital Impact, Inc.    July 23, 2001 – Oct. 2, 2001 
 New Power Holdings, Inc.   Oct. 30, 2000 – Dec. 31, 2001 
 Numerical Technologies, Inc.   May 4, 2000 – Aug. 2, 2000 
 Synopsys, Inc.     July 23, 1999 – March 12, 2000 
                                                                                    May            1,            2000            –            June            29,            2000            
 Winstar Communications, Inc.  Jan. 5, 2001 – April 5, 2001 
 
The identification of “equity securities in question” and “relevant periods of purchase” made 
herein is solely for the purpose of facilitating the efficient administration of the Distribution 
Fund Plan, is not a judicial or Commission finding, and is not intended to have precedential 
effect in other actions. 
            SO            ORDERED.            
 
Dated: New York, New York 
            October            31,            2003            
 
 
                                                                        ________________________________            
                                                                        WILLIAM            H.            PAULEY            III            
                                                                        UNITED            STATES            DISTRICT            JUDGE            
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OCR text (2,884c · tika · 95% conf) 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________ 
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 
    Plaintiff,   : Civil Action No. 
        : 
  -against-     : 03 Civ. 2946 (WHP) 
        : 
CREDIT SUISSE FIRST BOSTON LLC, F/K/A  : 
CREDIT SUISSE FIRST BOSTON CORPORATION, : 
        : 
    Defendant.   : 
________________________________________________: 
 

ORDER REGARDING DISTRIBUTION FUND PLAN 
 
 On October 31, 2003, the Court signed a Final Judgment as to Defendant Credit Suisse 

First Boston LLC, f/k/a Credit Suisse First Boston Corporation (“Final Judgment”).  Section II of 

the Final Judgment calls for the creation of a Distribution Fund, which consists of Defendant’s 

Federal Payment plus any income and interest earned thereon.1  Under Section V.A of the Final 

Judgment, “[t]he Distribution Fund Administrator shall formulate and administer a Distribution 

Fund Plan … intended to provide for the equitable, cost-effective distribution of funds to Eligible 

Distribution Fund Recipients.”  Under Section V.C.1 of the Final Judgment, to be an Eligible 

Distribution Fund Recipient, a person must have purchased “equity securities in question” 

through Defendant during the “relevant period of purchase.”  Also under Section V.C.1, 

“[i]dentification of the ‘equity securities in question’ and the ‘relevant period of purchase’ for 

each such equity security will be set forth (solely for the purpose of administering the 

Distribution Fund Plan) in a further order of the Court.” 

                                                 
1 All defined terms in the Final Judgment apply to this Order. 



 Accordingly, IT IS HEREBY ORDERED that the “equity securities in question” and the 

“relevant period of purchase” for each such equity security, as those terms are used in Section 

V.C.1 of the Final Judgment, are as follows: 

 Equity Securities in Question   Relevant Periods of Purchase  
 Agilent Technologies, Inc.   July 21, 2000 – Feb. 20, 2001 
 Digital Impact, Inc.    July 23, 2001 – Oct. 2, 2001 
 New Power Holdings, Inc.   Oct. 30, 2000 – Dec. 31, 2001 
 Numerical Technologies, Inc.   May 4, 2000 – Aug. 2, 2000 
 Synopsys, Inc.     July 23, 1999 – March 12, 2000 
       May 1, 2000 – June 29, 2000 
 Winstar Communications, Inc.  Jan. 5, 2001 – April 5, 2001 
 
The identification of “equity securities in question” and “relevant periods of purchase” made 

herein is solely for the purpose of facilitating the efficient administration of the Distribution 

Fund Plan, is not a judicial or Commission finding, and is not intended to have precedential 

effect in other actions. 

 SO ORDERED. 

 
Dated: New York, New York 
 October 31, 2003 
 
 
      ________________________________ 
      WILLIAM H. PAULEY III 
      UNITED STATES DISTRICT JUDGE 

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