In 2002, the Commonwealth of Massachusetts charged Credit Suisse First Boston with violating the Massachusetts Securities Act by issuing erroneous and misleading analyst reports on numerous companies.

The Commonwealth complaint describes the influence and control exerted by Credit Suisse First Boston's investment bankers on its supposedly independent research analysts and seeks to order Credit Suisse First Boston to separate its investment banking and research departments.

Massachusetts Secretary of State William Galvin and a team of security regulators have uncovered stronger evidence that Credit Suisse First Boston deliberately mislead investors with biased technology stock research. Regulators reviewed more than 100,000 subpoenaed emails and alleged Credit Suisse First Boston altered research reports for investment banking clients and conducted illegal underwriting schemes that were devastating to their smaller investors.

Credit Suisse First Boston and Frank Quattrone

During the IPO (Initial Public Offering) boom Credit Suisse First Boston was the top underwriter of technology IPOs. Under star tech banker Frank Quattrone, they underwrote $6.08 billion worth of IPOs on 62 separate issues. In 1999 and 2000, Credit Suisse First Boston earned more than $700 million in fees alone for helping bring technology companies public.

Investigators allege that Credit Suisse First Boston underwriters helped create a frenzy as to which favored customers would be given access to the high tech IPOs. This deceptive hype inflated the after-market price paid by individual investors. Then, just as small investors were rushing in to buy the new stocks, insiders and favored customers were selling so that the small investors suffered huge losses when the stocks collapsed. It is also alleged that certain underwriters gained profits from the IPO boom not only through the bloated fees they charged for their services in making the companies IPOs, but also by conducting kickback schemes with their favored customers.

Credit Suisse First Boston Lawsuits

Presently, a number of private class action lawsuits are pending against Credit Suisse First Boston's high tech underwriters and more are being filed. The suits allege that the underwriters violated federal securities laws by misrepresenting material facts not only to investors purchasing shares in the company but to regulatory bodies such as the SEC as well.

Secretary of State William Galvin was so disturbed by his office’s findings that he said that Credit Suisse First Boston had engaged in "systematic fraud" and believed that its behavior may qualify for "criminal referral."