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Wall Street Journal: Federal Probe of Commissions Focuses on 1999 VA Linux Deal

Dec 12, 2000, 13:41 (2 Talkback[s])
(Other stories by Susan Pulliam, Randall Smith)

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"Federal authorities investigating questionable ways Wall Street dealers allocate hot initial public offerings of stock are focusing on the IPO of VA Linux Systems, whose shares zoomed a record eight times the offering price on its first trading day a year ago, according to people familiar with the probe."

"The Securities and Exchange Commission and the U.S. attorney's office in Manhattan have launched a joint investigation into whether some investors paid unusually large stock-trading commissions in exchange for allocations of IPOs that surged in price on their first day of trading, and whether those payments constituted illegal kickbacks."

"VA Linux, a vendor of personal-computer software in Sunnyvale, Calif., was one of the hot deals underwritten by Credit Suisse First Boston; the big Wall Street firm's deals have been an early focus of the federal investigation, the people familiar with the inquiry say. The Credit Suisse Group unit declined to comment on any aspect of the VA Linux deal; it has confirmed receiving inquiries about its IPO allocations, which it says were in line with industry practice."

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