House Panel Expands List of Firms in IPO Probe
Congressional investigators on Monday expanded the list of companies for which they are seeking data in their probe of new stock offerings.
The House Financial Services Committee earlier this month asked Credit Suisse First Boston and Goldman Sachs Group Inc. about their business dealings with more than two dozen companies.
The committee is looking into the brokerages’ allocations of hot initial public stock offerings to corporate executives during the bull market.
The committee initially asked CSFB for details on 15 companies, and Goldman for information on 14 firms. On Monday, the committee asked CSFB for information on five additional companies: DLJdirect, Gadzoox Networks, MP3.com, Selectica and VA Linux Systems. It dropped one company, Earthshell Corp., from its earlier request because CSFB was not the lead underwriter of the company’s IPO, a committee spokeswoman said.
The committee asked Goldman Sachs for information on eight more companies: Allegiance Telecom, Checkpoint Technologies, EBay, EToys, Lucent Technologies, Starmedia Network, TheStreet.com and Yahoo Inc. Investigators also asked Goldman for information on the brokerage’s own IPO in May 1999.
The brokerages reiterated that they would cooperate with the committee’s probe.
“We’ve told the committee we’re happy to respond to their request, and we’re confident that our business practices will withstand the toughest scrutiny,” a Goldman spokeswoman said.
“We’re fully cooperating with the committee,” a CSFB spokesman said.
*
SEC to Appoint Expert on
Arbitrator Disclosures
The Securities and Exchange Commission is expected today to appoint an outside expert to study whether arbitrators working for the New York Stock Exchange and National Assn. of Securities Dealers should disclose additional information about themselves to investors.
The expert would assess whether investors need the extra disclosure to help them ferret out potential conflicts of interest that can affect arbitrators’ objectivity in disputes between investors and brokerages.
The selection of an outsider comes amid a battle between the NYSE and NASD on one side and California legislators on the other.
The NYSE and NASD in the summer said they would halt new arbitration proceedings in California, citing a new state law requiring the Judicial Council of California to write ethical guidelines for arbitrators in most private-arbitration cases--including those involving disputes over brokers’ sales of securities.
State Sen. Martha Escutia, the Whittier Democrat who sponsored the legislation, said she hoped to promote confidence in private arbitration, an increasingly common method of settling civil disputes.
But the NYSE and NASD contend the new standards are too cumbersome. They maintain that their own disclosure guidelines for arbitrators of securities disputes are sufficient and constitute a national standard endorsed by the SEC. The NYSE and NASD have sued, saying they should be exempted from the California law. A hearing on the matter is scheduled in San Francisco next week.
An SEC spokesman declined to comment.
Walter Hamilton and E. Scott Reckard
*
Briefly
Citigroup Inc., Merrill Lynch & Co. and seven other financial companies that trade municipal bonds were sued Monday for allegedly charging customers excessive fees to buy or sell the securities.
Kevin Olson, a former trader and founder of bond-data Web site MunicipalBonds.com, alleged that some fees charged by bond brokers violate California’s Unfair Competition Act. In a suit filed “on behalf of the general public” in San Francisco County Superior court, he also named Morgan Stanley, Bear Stearns Cos., UBS PaineWebber Inc., Prudential Securities Inc., Charles Schwab & Co., U.S. Bancorp and Bank of America Corp.
The firms named either declined to comment Monday or could not be reached for comment.
Bloomberg News
