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more from the SJMN -- 4 friends of Credit Swisse
From: Dave Farber <dave () farber net>
Date: Fri, 07 Mar 2003 13:28:17 -0500
Four sets of 'friends' at VeriSign, E.piphany, iPrint, Ascend Mercury News Here are examples of Silicon Valley executives who benefitted from their relationship with Frank Quattrone and CSFB: VeriSign Execs rewarded in dozens of IPOs VeriSign Chairman and Chief Executive Stratton Sclavos and Chief Financial Officer Dana Evan received stock in more than three dozen initial public offerings handled by Credit Suisse First Boston for their personal accounts. Sclavos received between 350 and 10,000 shares in each of 37 IPOs handled by Credit Suisse between February 2000 and May 2001, according to information obtained by the Mercury News. Based on the value after the first day's trading, Sclavos would have gained a $1,014,515 profit if he sold then. Evan received nearly the identical amount of shares as Sclavos, except in a few cases, and her potential profit, valued after the first day of trading, would have been $1,143,374. The Credit Suisse allocations, however, appeared to lead to little business with the Internet security company and domain name registrar based in Mountain View. Morgan Stanley, the firm's IPO underwriter, for example, was the key adviser on VeriSign's $21 billion purchase of Network Solutions in March 2000. Credit Suisse advised VeriSign in its $1.2 billion purchase of Illuminet in Sept. 2001. In its complaint filed Thursday, the NASD said ``dispensing such profits to tech company insiders was tantamount to giving them cash gifts,'' and in violation of NASD gift and gratuity rules. VeriSign had no comment. -- Mary Anne Ostrom E.piphany CEO among favorites E.piphany Chief Executive Roger Siboni ranked among the most favored ``friends of Frank,'' according to a review of information obtained by the Mercury News. Siboni received allocations of between 300 and 10,000 shares in each of at least 72 Credit Suisse First Boston initial public offerings handled by Frank Quattrone's technology banking unit between June 1999 and May 2001. In most other cases, executives received shares in hot Credit Suisse IPOs only after giving business to the investment bank. Siboni, however, received shares in at least 13 IPOs before CSFB took E.piphany public in September 1999. All told, the value of his holdings at the end of the first day's trading would have made him a profit of $2,094,908 if he sold then. Siboni has served as CEO and a member of E.piphany's board of directors since August 1998. He became chairman of the board of Directors in December 1999. After handling E.piphany's 1999 IPO, Credit Suisse served as the lead underwriter on a secondary offering in January 2000. All together, the investment bankers on the two offerings collected $35 million in fees. Credit Suisse split the fees with Morgan Stanley, Chase H & Q and Merrill Lynch. Credit Suisse also served as an adviser to E.piphany on its purchase of RightPoint in November 1999. E.piphany and Siboni refused to comment. Siboni is a member, and recently ended his term as chairman, of the advisory board of the Haas School of Business at the University of California-Berkeley. -- Mary Anne Ostrom iPrint CEO watched money double On iPrint.com's first day of trading, Chief Executive Royal Farros was so nervous about his own company's stock he hardly remembers the IPO's underwriter, Credit Suisse First Boston, telling him about the private banking services now available to him. Farros said he just signed on and watched his money double during the next year as Credit Suisse issued him from 250 to 7,025 shares in each of 28 new IPOs launched after iPrint's own March 2000 debut, according to information obtained by the Mercury News. IPrint Chief Financial Officer James McCormick received from 200 to 3,000 shares in each of 32 initial public offerings from March 2000 until May 2001. All told, the value of Farros' holdings at the end of the first day's trading would have made him a profit of $385,138 had he sold then. McCormick would have made $476,213. For its work on the iPrint IPO, Credit Suisse received $1,297,000, according to a civil complaint filed Thursday by the National Association of Securities Dealers against Credit Suisse tech-banking chief Frank Quattrone. The complaint concluded that the practice of allowing key executives at client companies to get in on hot IPOs ``was tantamount to giving them cash gifts,'' and in violation of NASD gift and gratuity rules. ``We absolutely did not see any wrongdoing,'' Farros said Thursday. ``It's laughable to think that private client services could be more important than working with an A-level bank or that that would sway us in any way.'' IPrint, he said, never did any future business with Credit Suisse, because ``they were too expensive.'' Farros said several investment banks seeking iPrint's IPO business had offered private banking services as part of ``full-service banking,'' and he received shares in IPOs offered by the two other investment banks involved in iPrint's IPO. Only at Credit Suisse, however, did he make any money. -- Mary Anne Ostrom Ascend Communications IPO list helped execs' trusts June 1999 was the high point of a beautiful friendship. In one of the largest high-tech mergers of the boom, Lucent Technologies completed its purchase of Ascend Communications for $25.2 billion in stock. Credit Suisse First Boston advised Ascend on the deal, reaping tens of millions in fees. Two Ascend executives, ex-CFO and board member Robert K. Dahl and Chief Executive Mory Ejabat, emerged as two of the most handsomely rewarded recipients on CSFB's IPO list. According to the list obtained by the Mercury News, Dahl's family trust received 63,375 shares in 99 IPOs. At the end of the first day of trading, those holdings would have produced a profit of $2,899,000 -- though it is unclear how quickly Dahl sold his shares. Ejabat's trust, meanwhile, received 94,202 shares in 88 IPOs. At first day's end, those holdings would have produced a profit of $1,852,847. Ejabat, who is now the CEO of a private Oakland networking company called Zhone Technologies, declined to comment. Dahl, now a venture capitalist based in Oakland, was traveling out of the country and could not be reached. From SEC records, however, it's clear that the relationship between Ascend officials and the technology bankers under Frank Quattrone was a warm and deep one. The Alameda-based Ascend used Deutsche Morgan Grenfell, Quattrone's former firm, as an adviser in its acquisitions of Cascade Communications in 1997 and Stratus Networks in 1998. According to investment bankers, the typical banking fee for a transaction like the Ascend-Lucent deal would range between 0.15 and 0.20 percent. If so, CSFB's fees on the deal would be between $37.5 million and $50 million. Lucent's plan to use Ascend as a way to challenge Cisco Systems, however, failed badly. Networking gear makers have been decimated in the recession. And Lucent's stock has fallen 97 percent since the deal was closed. ------------------------------------- You are subscribed as interesting-people () lists elistx com To manage your subscription, go to http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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