The Dot-Com Witch Hunt.(Brief Article)

When bad things happen to nice people in the United States, they hire the nastiest lawyer they can find. So it's no surprise that when the dust from the dot-com crash settled, Americans began searching for defendants to sue. Over the past few months, that impulse for cleansing and revenge has led to federal regulatory investigations and hundreds of lawsuits against investment banks, analysts and technology firms. The accusations range from the knowing promotion of bad stocks, to insider dealing, to bribes paid in exchange for a piece of a hot IPO. What's surprising is how far beyond Wall Street and Silicon Valley the hunt has now gone.

The increasingly global nature of financial markets--and of the Internet itself--means that litigious Americans aren't the only ones hunting witches. A new, more active generation of shareholders in Europe and Asia is demanding answers. Already, some of Europe's most eminent firms are caught up in accusations of scandal. Last week shareholder activists announced plans to sue Deutsche Bank for dumping 44 million shares of Deutsche Telekom just two days after one of its own analysts put a buy recommendation on the stock. DT CEO Ron Sommer was also incensed. And a number of European and Asian investors are even turning to Manhattan pit-bull attorney Melvyn Weiss, who is pressing class-action suits against Wall Street banks and tech firms, including a number of European companies. Weiss says he recently met with a law firm in London representing British pension trusts that may want to join the suits. "We're getting interest from all over the world," he says.

The company named in 49 of Weiss's 138 suits is Credit Suisse First Boston, the investment-banking arm of Switzerland's Credit Suisse Group. Whether or not the suits pan out, CSFB is at the center of the global tech scandal. The firm is under investigation by the SEC, and six of its employees have been cited by the National Association of Securities Dealers for alleged wrong-doing during IPOs. Three brokers who reported to the controversial technology investment banking boss Frank Quattrone were fired in June. The key issue is whether CSFB played fast and loose in its handling of high-tech IPOs. The most damning allegations are that the firm may have inflated its commissions, taking what amounted to bribes from clients who wanted to guarantee themselves a piece of a hot IPO. "Compared to banks like Morgan Stanley or Goldman Sachs, CSFB was the upstart in high-tech IPOs," says Columbia University professor and securities expert John Coffee. "They went from being nowhere to being at the top of the pack within two years." CSFB spokesperson Victoria Harmon says that the ...