IPOs: Used To Abuse

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02: ISSUE 7 =09
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IPOs: Used To Abuse Yesterday, Credit Suisse First Boston, one of the mo=
st respected firms on Wall Street said it will pay U.S. securities regulato=
rs $100 million to settle charges of using abusive practices to allocate sh=
ares in initial public offerings (IPOs). In a statement issued by Stephe=
n Cutler, Director of the SEC's Division of Enforcement, "CSFB improperly t=
ook advantage of its position as underwriter by allocating shares of hot IP=
Os to customers who agreed to share their IPO profits by paying excessive c=
ommissions." CSFB made $718 million underwriting technology IPOs in 1999=
and 2000. The firm will pay a $30 million fine and hand over $70 million =
in profit to resolve charges of "abusive IPO allocation practices". The SEC=
and the National Assn. of Securities Dealers alleged that CSFB illegally p=
rofited on hot IPOs by charging commissions of as much as $3.15 a share, co=
mpared with a typical rate of 6 cents. The SEC also is probing whether fi=
rms such as Morgan Stanley, Goldman Sachs, Robertson Stephens and J.P. Morg=
an, received pledges from customers to purchase more stock after IPOs began=
trading. The large investment banks' pain will most certainly turn out =
to be a gain for some. Our next profile is one of the beneficiaries of not=
going through a traditional IPO. We are extremely proud to have found thi=
s gem. The company will be going public through an RTO, and it will open f=
or trading on the American Stock Exchange. Unfortunately we do not have an =
exact date on this new issue but it is safe to say that the first week of F=
ebruary will be the time frame for the stock to open for trading. You can l=
earn more about RTOs in our January 16th edition of the SmallCap Digest. =
We cannot announce the name of the company at this time but we can tell yo=
u it is a medical device manufacturer already generating significant sales =
in the U.S. and abroad. The company expects to turn cash flow positive this=
year and has a tremendous pipeline of products. This company is a "pick & =
shovel" entity that is helping to power the biotech revolution. This com=
pany has already been featured on a special segment on Good Morning America=
. In addition, their shareholders include some of the smartest money on th=
e planet. Because this company will not be going public through the traditi=
onal IPO, all open market investors will be on an equal playing field once =
the stock begins trading. The even playing field provided by an RTO is a=
breath of fresh air in an industry marred with improprieties. The SmallCa=
p Digest will immediately send out our profile on the company once it is op=
ened for trading. For the most up to date alert on this new profile, we sug=
gest our subscribers visit our home page. There we will provide the name, s=
ymbol and current quote of the company the moment the stock begins trading.=
Remember that although all the facts and figures will be provided to yo=
u so that you may make an informed investment decision, you should still ma=
ke an effort to confirm all information through independent third party sou=
rces, i.e. the SEC Edgar filings and the company's web site. =09
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