Credit Suisse First Boston, going a step beyond rival firms, has barred equity and debt analysts from owning securities of the companies they cover.
As a climate of suspicion and hostility continues to swirl around research analysts and potential conflicts of interest, CSFB is only the second firm to respond by prohibiting research analysts from owning stock in the companies they cover. But it is the first to extend the policy to owning bonds.
CSFB is a focus of regulators’ investigations into how Wall Street firms allocated hot IPOs during the dot-com bubble.
This month the firm, owned by big Swiss bank Credit Suisse group, responded by removing former CEO Alan Wheat and firing three brokers from the firm.
The move is the first change in policy since John Mack, former president of Morgan Stanley Dean Witter & Co. was hired as CEO 12 days ago.
CSFB’s 430 analysts will have until the end of September to sell their securities, but some may be eligible for exemptions so as not to impose undue financial penalties, the firm’s statement said.
Last month, CSFB also changed reporting lines so that all analysts report directly into global equity research and not to investment banking, in response to criticism that analysts’ independence is compromised.
Merrill Lynch & Co., the nation’s largest stock brokerage firm, started the trend this month when it announced that its analysts would not be allowed to buy shares in the companies they cover.
And last week Merrill settled – rather than fight in the courts – a lawsuit filed by a Queens doctor alleging misinformation and conflict of interest from star Internet analyst Henry Blodget.