CSFB's "Friends of Frank" accounts generated $80M windfall for executives
Wall Street Journal details how Credit Suisse First Boston rewarded certain technology company executives:
The brokers who worked with Mr. Quattrone set up accounts for select executives of companies that hired the Quattrone group to take them public or could give the firm other investment-banking assignments, according to people familiar with the matter. The accounts, which were all managed by the brokers in a similar fashion, would receive a few hundred shares of each IPO, reselling them within a few weeks at a profit and engaging in other trading as well. The number of these accounts grew from just 26 in January 1999 to about 160 in early 2000, according to one CSFB e-mail.
...CSFB's "Friends of Frank" accounts generated profits for executives of about $80 million or more after the IPOs were sold off gradually over several weeks, according to people familiar with the accounts.
...Some executives who got "Friends of Frank" accounts closed them after clashing with the CSFB brokers who ran them -- either over IPOs they didn't want, or lack of control over the accounts, according to people familiar the matter. The accounts generally got all the CSFB IPOs led by the Quattrone group bankers, but some clients only wanted the hot deals, or wanted to sell them immediately instead of over a period of weeks.
Jeffrey A. Dachis, former chairman and CEO of Razorfish Inc., a New York Internet-service provider, says he had a misunderstanding with the CSFB brokers about the discretionary nature of his account, which he opened soon after CSFB led a $55.2 million IPO for Razorfish in April 1999. When Mr. Dachis questioned why some IPOs he had never heard of had been put in his account, the brokers shifted him out of the program. After that, he says he kept an account he managed himself with the same broker at CSFB.