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In what increasingly looks like a multistate regulatory pile-up, the commonwealth of Massachusetts on Monday brought civil charges against Credit Suisse First Boston for its research practices. Massachusetts Secretary of the Commonwealth William Galvin said in a news conference Monday that he planned to ask CSFB to separate its research and investment banking operations, as well as pay a $2 million fine. SEC officials had asked Galvin to hold off for 10 days as a global settlement is being hammered out by a cadre of other regulators. After hearing of Galvin’s move, SEC officials privately expressed outrage at what they saw as Galvin’s attempted derailment of the global settlement. The SEC declined official comment. Talks between the state and CSFB had been widely reported for about two weeks, but CSFB, buffeted by a series of major investigations and fines, is digging in its heels on this one. The reason: About three weeks ago, New York Attorney General Eliot Spitzer, along with the Securities and Exchange Commission, the NASD, the New York Stock Exchange and the North American Securities Administrators Association, all agreed to work jointly to reach a global settlement with securities firms. The NASD declined comment. A CSFB spokeswoman could not be reached for comment. Galvin is clearly not out to make friends with the SEC. “We act today because the SEC has failed to act,” Galvin pointedly said during the news conference held on the steps of the Massachusetts State House. Galvin, in investigating CSFB’s e-mails and other documents, discovered presentation charts and e-mails showing CSFB indicating that its research analysts would be slow to downgrade the stocks of favored clients. “The analysts in CSFB’s Global Technology Group worked for the investment banking side, giving favorable ratings to companies that did business with CSFB,” Galvin said. Utah, which is investigating Goldman Sachs & Co., also is making noises about bringing its investigation to an end soon as well. Copyright (c)2002 TDD, LLC. All rights reserved.

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