UNITED STATES DISTRICT COURT

DISTRICT OF COLUMBIA

________________________________________ :  
SECURITIES AND EXCHANGE COMMISSION

Plaintiff,

-against-

CREDIT SUISSE FIRST BOSTON
CORPORATION,

Defendant.

:
:
:
:
:
No. CV ( )
________________________________________ :  

FINAL JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF AGAINST CREDIT SUISSE FIRST BOSTON CORPORATION

Plaintiff Securities and Exchange Commission (the "Commission"), having commenced this action on January 22, 2002 against Credit Suisse First Boston Corporation ("CSFB"), for injunctive and other equitable relief ("Complaint") charging CSFB with violations of Rules 2110 and 2330 of the NASD Conduct Rules, and Section 17(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78q(a), and Rule 17a-3, 17 C.F.R. § 240.17a-3, thereunder; and defendant CSFB, having executed the Consent and Undertakings of Credit Suisse First Boston Corporation ("Consent"), which is annexed hereto, having admitted to the service of the Summons and Complaint on it, having admitted to the jurisdiction of this Court over it and over the subject matter of this action, having waived the entry of findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, and without admitting or denying the allegations of the Commission's Complaint (except as to jurisdiction, which are admitted), and having consented to the entry, of this Final Judgment of Permanent Injunction And Other Equitable Relief By Consent Against Credit Suisse First Boston Corporation ("Final Judgment"); without further notice:

I.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that CSFB, directly or through its officers, directors, agents and employees, is hereby permanently enjoined and restrained, directly or indirectly, from engaging in acts, practices, transactions or policies that constitute unjust or inequitable conduct toward customers of CSFB, by sharing profits of CSFB customers in exchange for allocations of shares in Initial Public Offerings underwritten by CSFB, in whole or in part, in violation of Rule 2110 of the NASD Conduct Rules.

II.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that CSFB, directly or through its officers, directors, agents and employees, is hereby permanently enjoined and restrained, directly or indirectly, from sharing in the profits or losses in any account of a customer, except as may be permitted by NASD Conduct Rule 2330, New York Stock Exchange Rule 352 or rules of other Self Regulatory Organizations, by engaging in acts, practices or transactions to obtain improper payments from customers in exchange for allocations of shares in Initial Public Offerings underwritten by CSFB, in whole or in part, in violation of Rule 2330 of the NASD Conduct Rules.

III.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that CSFB, directly or through its officers, directors, agents, servants and employees is hereby permanently restrained and enjoined, directly or indirectly, from violating Section 17(a) (1) of the Exchange Act, 15 U.S.C. § 78q(a)(1), and Rule 17a-3 thereunder, 17 C.F.R.

§ 240.17a-3, by failing to make and keep for prescribed periods such records, to furnish such copies thereof, and to make, disseminate and file the reports required by such section and the rules thereunder, which set forth requirements concerning records and reports required to be made and preserved by certain exchange members, brokers and dealers.

IV.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, CSFB shall pay $70 million, representing disgorgement of monies obtained improperly by CSFB as a result of the conduct alleged in the Complaint, provided, however, that the foregoing payment obligation shall be reduced by any amounts paid by CSFB pursuant to its agreement to pay disgorgement to NASD Regulation, Inc. ("NASDR") in a related proceeding.

V.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that payment of the disgorgement shall be made to the U.S. Treasury. Such Order is based on the Commission's determination, in light of the violations of NASD Conduct Rules 2110 and 2330, and Section 17(a) of the Exchange Act and Rule 17a-3 thereunder, as alleged in the Complaint, that the disgorgement funds should not be distributed to any third parties, and that payment of such funds to the Treasury is appropriate and in the public interest. Such payment shall be: (A) made within thirty days of the entry of this Final Judgment by wire transfer, United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (D) submitted under cover letter that identifies the defendant, the name and civil action number of this litigation, and the court in which it was brought. The cover letter also shall contain the investigation name (In the Matter of Certain IPO Allocations) and the case number assigned by the Commission staff (NY-6752), and shall identify the payment as payment of disgorgement. A copy of the cover letter and of any wire transfer instructions, money orders or checks, front and back, shall be transmitted simultaneously to Caren Nelson Pennington, Esq., Securities and Exchange Commission, 233 Broadway, New York, New York 10279.

VI.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that CSFB shall pay a civil penalty of $30 million pursuant to Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), provided, however, that the foregoing payment obligation shall be reduced by any amounts paid by CSFB pursuant to its agreement to pay a penalty to NASDR in a related proceeding.

VII.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the payment of the civil penalty described in Paragraph VI shall be made within thirty days of the entry of this Final Judgment by wire transfer, U.S. postal money order, certified check, bank cashier's check, or bank money order payable to the order of the "United States Securities and Exchange Commission." This payment shall be transmitted to the Comptroller, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, under cover of a letter that identifies the defendant, the name and civil action number of this litigation, and the court in which it was brought. The cover letter also shall contain the investigation name (In the Matter of Certain IPO Allocations) and the case number assigned by the Commission staff (NY-6752), and shall identify the payment as a civil penalty under Section 21(d)(3) of the Exchange Act. A copy of the cover letter and of any wire transfer instructions, money orders or checks, front and back, shall be transmitted simultaneously to Caren Nelson Pennington, Esq., Securities and Exchange Commission, 233 Broadway, New York, New York 10279.

VIII.

IT IS FURTHER ORDERED that the attached Consent be, and hereby is, incorporated herein with the same force and effect as if fully set forth herein.

IX.

IT IS FURTHER ORDERED that CSFB shall comply with the undertakings set forth in the attached Consent.

X.

IT IS FURTHER ORDERED that the Court shall retain jurisdiction of this matter for all purposes, including, but not limited to, implementing and enforcing the terms and conditions of this Final Judgment.

XI.

IT IS FURTHER ORDERED that the Court expressly determines that there is no just reason for delay in the entry of this Final Judgment. The Clerk of the Court is hereby directed pursuant to Rule 54(b) of the Federal Rules of Civil Procedure to enter this Final Judgment forthwith.

XII.

IT IS FURTHER ORDERED that pursuant to Rule 65(d) of the Federal Rules of Civil Procedure, this Final Judgment is binding upon defendant CSFB, its officers, agents, servants, employees, and attorneys-in-fact, and upon those persons in active concert or participation with them who receive actual notice of this Final Judgment by personal service or otherwise.

Dated: ________________, 2002

  SO ORDERED:

________________

U.S.D.J.


UNITED STATES DISTRICT COURT

DISTRICT OF COLUMBIA

________________________________________________ :  
SECURITIES AND EXCHANGE COMMISSION

Plaintiff,

-against-

CREDIT SUISSE FIRST BOSTON CORPORATION,

Defendant.

:
:
:
:
:
No. CV ( )
__________________________________________ :  

CONSENT AND UNDERTAKINGS OF CSFB TO FINAL JUDGMENT

OF PERMANENT INJUNCTIVE AND OTHER RELIEF

  1. Defendant Credit Suisse First Boston Corporation ("CSFB"), upon the advice of counsel and being fully apprised of its rights, having read and understood the terms of the attached Final Judgment of Permanent Injunction and Other Equitable Relief By Consent Against CSFB ("Final Judgment"), admits to the jurisdiction of this Court, waives the entry of findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure, and without further notice, prior trial, hearing, presentation of any evidence, adjudication of any issue of fact, or argument, and without admitting or denying the allegations contained in the Complaint of Plaintiff Commission (except as to jurisdiction, which are admitted), hereby consents to the entry of the annexed Final Judgment.
     
  2. CSFB states and understands that, on the basis of this Order and Judgment, the Commission will not institute a proceeding against CSFB pursuant to Section 15(b) of the Securities Exchange Act ("Exchange Act"), 15 U.S.C. § 78o, Section 15B of the Exchange Act, 15 U.S.C. § 78o-4, Section 15C of the Exchange Act, 15 U.S.C. § 78o-5, or Section 19(h) of the Exchange Act, 15 U.S.C. § 78s(h).
     
  3. CSFB agrees that this Consent and Undertakings of CSFB ("Consent") shall be incorporated by reference in and made part of the Final Judgment.
     
  4. CSFB waives any right it may have to appeal from the Final Judgment.
     
  5. CSFB agrees that it will not oppose the enforcement of the Final Judgment on the ground, if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and hereby waives any objection it may have based thereon.
     
  6. CSFB acknowledges that any violation of any of the terms of the annexed Final Judgment may place it in contempt of this Court and subject it to civil or criminal sanctions, or both.
     
  7. CSFB agrees and undertakes to pay $70 million, representing disgorgement of monies obtained by CSFB as a result of the conduct alleged in the Complaint for injunctive and other equitable relief filed on January 22, 2002 by Plaintiff Securities and Exchange Commission ("Commission"), within thirty days of the Final Judgment. CSFB understands that this amount will be reduced by its payment of $35 million in disgorgement to NASD Regulation, Inc. ("NASDR") in a related proceeding.
     
  8. CSFB agrees and undertakes to pay $30 million as a civil penalty pursuant to Section 21(d)(3) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78u(d)(3) within thirty days of the entry of the Final Judgment. CSFB understands that this amount will be reduced by its payment of $15 million to NASDR in a related proceeding.
     
  9. CSFB agrees to adopt and implement policies and procedures relating to the allocation of IPO shares. These procedures are set forth more fully in the Basic Principles and Procedures Regarding IPO Allocation Practices dated January 15, 2002 a copy of which CSFB has provided to the staff of the Commission, and are summarized below:
    (a) CSFB has agreed to establish an IPO Allocation Review Committee (the "IARC") to be composed of at least three directors or managing directors from the Equity Division and the Equity Capital Markets Department. A member of the Legal and Compliance Department will serve as an adviser to the IARC. The IARC will, among other things, implement processes that provide for the review, approval or rejection of proposed IPO allocations to pre-qualified customers;
    (b)CSFB has established, and may continue to revise, subject to the approval of the IARC, criteria to be used in making IPO allocations and has prohibited the following conduct: (1) making a wrongful arrangement or a wrongful quid pro quo of any kind with customers in exchange for IPO allocations; and (2) sharing profits or losses with a customer who receives an IPO allocation or allocations, except as may be permitted by NASD Conduct Rule 2330, NYSE Rule 352 or rules of other Self Regulatory Organizations;
    (c) CSFB has agreed to establish and document requirements to pre-qualify customers to receive IPO allocations, including minimum time periods that customers must maintain accounts with the Firm prior to receiving IPO allocations, subject to certain exceptions approved by the IARC, or as set forth in CSFB's policies and procedures;
    (d) CSFB has agreed to implement new account opening procedures and to take steps relating to existing accounts to prevent abuses in the IPO allocation process;
    (e) CSFB has agreed to establish enhanced supervisory and compliance procedures, including (i) review by supervisors and compliance personnel of commissions through exception reporting designed to detect higher-than-normal commissions in connection with IPOs (with copies of such reports and evidence of such review to be maintained by CSFB and available for review by SEC or NASDR examination staff upon request); and (ii) enhanced supervisory and compliance review of electronic communications; and
    (f) CSFB has agreed to provide additional training to CSFB employees regarding IPO allocation issues.
  10. CSFB agrees to retain, at its own expense, an Independent Consultant acceptable to the staff of the Commission to conduct a review to provide reasonable assurance of the implementation and effectiveness of the policies and procedures referenced in Paragraph 9 of this Consent. This review will begin one year after the date of the entry of the Final Judgment. The Independent Consultant will produce a report regarding CSFB's compliance with the internal policies and procedures referenced in paragraph 9 of this Consent. If necessary, the report shall also make recommendations designed to ensure that CSFB's allocation practices and procedures are fair, equitable, and in compliance with the federal securities laws and the NASD Rules of Conduct. The report will be produced to CSFB and the Commission staff within 30 days from the completion of the review, but no later than 18 months from the date of entry of the Final Judgment. The Independent Consultant shall have the option to seek an extension of time by making a written request to the Commission staff.
     
  11. CSFB shall have a reasonable opportunity to comment on the Independent Consultant's review and proposed report prior to its submission to the Commission, including a reasonable opportunity to comment on any and all conclusions and recommendations, and to seek confidential treatment of such information and findings set forth therein to the extent that the report concerns proprietary commercial and financial information of CSFB. This report will be subject to the protections from disclosure set forth in the rules of the Commission, including the protections from disclosure set forth in 5 U.S.C. § 552(b)(8) and 17 C.F.R. § 200.80(b)(8), and will not constitute a record, report, statement or data compilation of the Commission under Rule 803(8) of the Federal Rules of Evidence.
     
  12. CSFB shall adopt all recommendations contained in the written report of the Independent Consultant; provided, however, that as to any recommendation that CSFB believes is unduly burdensome or impractical, CSFB may demonstrate why the recommended policy or procedure is, under the circumstances, unreasonable, impractical and/or not designed to yield benefits commensurate with its cost, or CSFB may suggest an alternative policy or procedure designed to achieve the same objective, and submit such explanation and/or alternative policy or procedure in writing to the Independent Consultant and to the Commission staff. CSFB and the Independent Consultant shall then attempt in good faith to reach agreement as to any policy or procedure as to which there is any dispute and the Independent Consultant shall reasonably evaluate any alternative policy or procedure proposed by CSFB. If an agreement on any issue is not reached, CSFB will abide by the determinations of the Commission staff with regard thereto and adopt those recommendations deemed appropriate by the Commission staff. Within ninety (90) days of the Commission staff's receipt of the Independent Consultant's report, CSFB shall submit an affidavit to the Commission staff stating that it has implemented any and all actions recommended by the Independent Consultant or required by the Commission staff, or explaining the circumstances under which it has not implemented such actions.
     
  13. CSFB shall cooperate fully with the Independent Consultant in this review, including making such non-privileged information and documents available, as the Independent Consultant may reasonably request, and by permitting and requiring CSFB's employees and agents to supply such non-privileged information and documents as the Independent Consultant may reasonably request.
     
  14. . To ensure the independence of the Independent Consultant, CSFB (i) shall not have the authority to terminate the Independent Consultant without the prior written approval of the Commission staff; and (ii) shall compensate the Independent Consultant, and persons engaged to assist the Independent Consultant, for services rendered pursuant to this Order at their reasonable and customary rates.
     
  15. For the period of engagement and for a period of two years from completion of the engagement, the Independent Consultant shall not enter into any employment, consultant, attorney-client, auditing or other professional relationship with CSFB, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity. Any firm with which the Independent Consultant is affiliated or of which he/she is a member, and any person engaged to assist the Independent Consultant in performance of his/her duties under this Order shall not, without prior written consent of the Commission's Northeast Regional Office, enter into any employment, consultant, attorney-client, auditing or other professional relationship with CSFB, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity as such for the period of the engagement and for a period of two years after the engagement.
     
  16. CSFB agrees that, for a period of three years following the date hereof, it will not make any material revision of the policies and procedures referenced in Paragraph 9 of this Consent without approval from the Independent Consultant, provided such approval will not be unreasonably withheld. Prior to the appointment of the Independent Consultant, any material revisions of the policies and procedures referenced in Paragraph 9 of this Consent will require the approval of the IARC, at a meeting of the IARC where minutes will be kept. After the appointment of the Independent Consultant, such minutes will be made available to the Independent Consultant upon request.
     
  17. CSFB enters into this Consent voluntarily and acknowledges that no tender, offer, promise, or threat of any kind has been made by plaintiff Commission, or any member, officer, attorney, agent, or representative, to induce it to enter into this Consent.
     
  18. CSFB acknowledges that it has read, understands, and agrees to comply with the policy of the Commission, set forth in 17 C.F.R. § 202.5(e), not to permit a defendant to consent to a judgment or order that imposes relief or a sanction while denying any allegation in the Complaint or finding in a judgment or order. In compliance with this policy, CSFB agrees not to take any action or make, or permit to be made, any public statement denying, directly or indirectly, any allegations in the Complaint or creating the impression that the Complaint or Final Judgment is without factual basis. If CSFB breaches this agreement, the Commission may petition the Court to vacate the Final Judgment and restore this proceeding to the active docket. Nothing in this provision affects CSFB's (i) testimonial obligations or (ii) right to take legal positions in litigation in which the Commission is not a party.
     
  19. CSFB acknowledges that, subject to the procedures set forth in Commission rules, it has been informed that the Commission, in its sole and exclusive discretion, may refer this matter, or any information or evidence gathered in connection therewith or derived therefrom, to any person or entity having appropriate administrative, civil, or criminal jurisdiction.
     
  20. CSFB acknowledges and agrees that this civil action, and its Consent to the entry of the Final Judgment, are for the purposes of resolving this civil action only, in conformity with the provisions of 17 C.F.R. § 202.5(f), and do not resolve, affect, or preclude any other action or proceeding that may be brought against CSFB. Consistent with the provisions of 17 C.F.R. § 202.5(f), CSFB waives any claim of Double Jeopardy based upon the settlement of this proceeding, including the imposition of any remedy or civil penalty herein. CSFB acknowledges that the Court's entry of a permanent injunction may have collateral consequences under federal or state law and the rules and regulations of self-regulatory organizations, licensing boards, and other regulatory organizations. CSFB has made various applications for temporary and permanent relief from such disqualifications and collateral consequences with the Commission, various self-regulatory organizations, licensing boards, and other regulatory organizations, with the express understanding that the staff of the Commission does not oppose the grant of such relief pursuant to those applications. Such collateral consequences include, but are not limited to, a statutory disqualification with respect to membership or participation in, or association with a member of, a self-regulatory organization. This statutory disqualification has consequences that are separate from any sanction imposed in an administrative proceeding.
     
  21. In connection with any continuing investigation or litigation by the Commission in the matter giving rise to this Consent, Complaint and Final Judgment, CSFB, subject to the procedures set forth in Commission rules and the privileges and protections available to CSFB under state or federal law, including the attorney-client privilege and attorney work-product protections, undertakes to disclose truthfully to the Commission and its representatives all information concerning CSFB's own activities and the activities of others on any matters about which the Commission may reasonably inquire, and undertakes further to attend all meetings at which its presence is reasonably requested with respect to the matters about which the Commission may reasonably inquire and to appear and testify truthfully at any trial, hearing, or court or administrative proceeding with respect to any matters about which the Commission may request its testimony, all of which, as set forth above, relates to the matter giving rise to this Consent, Complaint and Final Judgment. Further, in connection with any such continuing Commission investigation or litigation in the matter giving rise to this Consent, Complaint and Final Judgment, CSFB undertakes further, subject to the procedures set forth in the Commission rules and the privileges and protections available to it under state or federal law, to provide to the Commission any documents, records, or other tangible evidence in its possession, custody, or control, relating to the matters about which the Commission or its representatives may reasonably inquire. In connection with any such continuing Commission investigation or litigation in the matter giving rise to this Consent, Complaint, and Final Judgment, CSFB agrees that it will not assert the Fifth Amendment as a bar to providing any of the information required hereunder.
     
  22. CSFB acknowledges that this Consent embodies the entire understanding of the parties concerning the settlement of this action.
     
  23. CSFB consents further that this Court shall retain jurisdiction of this matter for all purposes.
     
  24. Except as explicitly provided in this Final Judgment and Consent, nothing herein is intended to or shall be construed to have created, compromised, settled or adjudicated any claims, causes of action, or rights of any person whomsoever, other than as between the Commission and CSFB, in accordance with the Consent.
     
  25. CSFB states that it is its intention that this Consent, the Complaint and Final Judgment not constitute collateral estoppel as to any issue of law or fact nor constitute a record, report, statement or data compilation within the meaning of Rule 803(8) of the Federal Rules of Evidence. CSFB understands that the Commission takes no position concerning CSFB's statement or its intention.
     
  26. CSFB hereby consents and agrees that the annexed Final Judgment may be presented by the Commission to the Court for signature, filing, and entry without further notice and delay.
     
  27. CSFB agrees that service by first class mail to Lewis Liman, Esq., Wilmer, Cutler & Pickering, 520 Madison Avenue, New York, New York, 10022, shall be deemed personal service for all correspondence, service and notices as to any matter related to this Consent and the annexed Final Judgment, unless CSFB notifies the Commission otherwise by letter addressed to counsel for the Securities and Exchange Commission, Northeast Regional Office, 233 Broadway, New York, New York 10279.
     

Dated: January 17, 2002

Credit Suisse First Boston Corporation

By:Gary G. Lynch,

Title: Global General Counsel and
Member of Executive Board

STATE OF NEW YORK)

)ss.:

COUNTY OF Westchester )

On this 17th day of January, 2002, before me personally appeared Gary Lynch, to be known to be the person who executed the foregoing Final Judgment of Permanent Injunction and Other Equitable Relief By Consent Against CSFB Consent and did acknowledge to me that he was authorized execute the same on behalf of Credit Suisse First Boston.

  Andrew D. Kaiser  

NOTARY PUBLIC


RESOLUTION
OF
CREDIT SUISSE FIRST BOSTON CORPORATION

RESOLVED, that

Gary G. Lynch, General Counsel, of Credit Suisse First Boston Corporation, is authorized and directed to execute on behalf of Credit Suisse First Boston Corporation, the Consent And Undertakings Of CSFB To Final Judgment Of Permanent Injunctive And Other Relief dated January 17, 2002 as attached hereto and made part hereof.

CREDIT SUISSE FIRST BOSTON CORPORATION

________________________