Move is latest in series of actions against executives
Last Update: 2:13 PM ET Aug. 15, 2002
WASHINGTON (CBS.MW) - The National Association of Securities Dealers on Thursday levied $400,000 in fines and suspended the licenses of two CS First Boston executives for charging excessive commissions to buyers of initial public offerings during the bull market years.
J. Anthony Ehinger, global head of equity sales, and George W. Coleman, institutional listed sales trading head, were fined $200,000 each and were both suspended for 60 days.
The regulatory body charged them with "failing to supervise and prevent the firm from receiving excessive commissions in exchange for allocations of hot Initial Public Offerings."
The practices, known as "laddering" and "spinning" IPOs, have since been barred in a rules change by the NASD. See full story.
Scott Edelman and Kevin H. Marino, lawyers for Coleman and Ehinger, released a statement to CBS.MarketWatch.com on behalf of their clients: "This case raised enormously complicated and novel legal questions of first impression regarding the allocation of IPOs during the unprecedented tech boom of 1999 and 2000."
The two executives, "have decided that it is in the best interests of all concerned to resolve the case without admitting or denying the NASD's failure to supervise charge.
"In making that charge, the NASD acknowledged that, in fact Ehinger and Coleman made efforts to get legal and compliance advice on these questions, though it found that those efforts were not sufficient to discharge their supervisory obligations."
It's the latest in a series of actions against the executives.
In January, the NASD and the Securities and Exchange Commission fined CS First Boston (CSR: news, chart, profile) $100 million for extracting tens of millions of dollars from customers.
And in February, CS First Boston fined the executives $500,000 apiece, according to published reports. See full story.
The NASD determined that CSFB's IPO profit-sharing practice was widespread, affecting more than 300 accounts.
Separately, NASD suspended the licenses of four former CSFB employees for one year and fined them $30,000 each for failing to provide NASD with timely testimony in this matter.
Ehinger and Coleman both continue to work for CS First Boston, said bank spokeswoman Victoria Harmon.
In a statement, CS First Boston confirmed the latest disciplinary action and said it settled the issue with the SEC in January.
The bank said it took internal disciplinary actions against the employees and that at that time, the bank "understood that regulators were continuing their investigations of the individuals."
Steve Gelsi is a reporter for CBS.MarketWatch.com in New York.
