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Parent of Thomas Weisel Asset Management Settles SEC Charges

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SAN FRANCISCO (–Thomas Weisel Partners LLC, a brokerage firm and investment bank, concluded a settlement with the Securities and Exchange Commission resolving charges that relate to the inappropriate influence allegedly exerted by its investment bankers upon its research analysts.

The SEC’s complaint alleged that Thomas Weisel Partners analysts participated in pitches for the investment banking business and prepared portions of pitch books used in such solicitations. In certain situations, TWP issued research reports that contained exaggerated claims for which there was no reasonable basis, the SEC said. One of the specifics alleged involved Level3 Communications Inc., Broomfield, Colo., a telecomm concern.

In late spring 2001, TWP had a buy rating for Level3, although at the time an analyst covering that company admitted in an email that “I’ve basically been telling our clients that it is a great short.” He wasn’t inclined to downgrade the stock, though, until after a business conference sponsored by TWP because, as the same analyst said in a separate email, “If I downgrade right now they will assuredly pull from our conference and we can’t afford that.”

Hedge fund manager Thomas Weisel Asset Management LLC, which manages Tailwind Investment Partners LP, is a division of TWP, but representatives for the bank declined to comment on the case.

TWP agreed to pay US$5 million as disgorgement and an additional US$5 million in penalties. Half of that money will be placed in a distribution fund for the benefit of customers of the firm, and the other half will resolve related proceedings by state regulators. In addition, TWP agreed to pay US$2.5 million to provide the firm’s clients with independent research over five years. TWP neither admits nor denies the allegations of the complaint.

Other features of the settlement require TWP to retain at its own expense an independent monitor to conduct a review providing reasonable assurance that the firm is complying with structural reforms. The monitor is to submit a report on his findings to the SEC, the National Association of Securities Dealers and the New York Stock Exchange no later than Oct. 31, 2005. On Oct. 31, 2008, TWP must certify to the SEC and other regulators that it has complied in all material respects with the requirements and prohibitions of structural reforms.

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Contact Bob Keane with questions and comments at: [email protected].

Contact Bob Keane with questions and comments at: [email protected].


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