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CNN Live At Daybreak
Big $1.4 Billion Wall Street Settlement
Aired April 28, 2003 - 06:16 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Time now for a little business buzz. The government is expected to announce this morning the final terms of a big Wall Street settlement.
Susan Lisovicz live in New York.
So how big is big?
SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: It's huge, Carol, it's $1.4 billion. It is a landmark settlement, and this could bring some solace, not complete solace, to the millions of shareholders who invested in Internet stocks a few years ago and got burned in the process.
Basically what you're going to see this afternoon in Washington is security regulators from around the country announcing the final terms of this settlement. These include the biggest brokerage banks in the nation, Carol, among them, Salomon Smith Barney, Merrill Lynch, Morgan Stanley, Goldman Sachs, Credit Suisse First Boston.
What's really interesting, Carol, is that, according to published reports, three of those banks, or two of those banks, Citigroup and Salomon Smith Barney, are going to be charged with fraud. You haven't seen this kind of seriousness in the wording. Usually they just either admit or deny wrongdoing.
Once they admit fraud, it opens it up to shareholder lawsuits. That could bring in, by some estimates, an additional $3.5 billion in penalties. That's just one estimate. A lot going on here.
The heart of the investigation, Carol, as you know, involved research where these research analysts were hyping stocks that, in some cases, they were privately ridiculing. They were just trying to win very lucrative investment banking business with the same firms that they were hyping. So a very big day on Wall Street.
COSTELLO: Yes, I was just going to ask you how much of that would go to investors, but you answered my question because shareholders will probably sue now, too.
LISOVICZ: Right, and this $1.4 billion is expected to fund independent research so that when investors are looking at a stock that they can find some credibility from these research reports.
COSTELLO: That's scary because there are a lot of angry investors out there.
LISOVICZ: There sure are and they may express it in the courts down the road.
COSTELLO: Definitely so.
Susan Lisovicz, we'll get back to you later.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired April 28, 2003 - 06:16 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Time now for a little business buzz. The government is expected to announce this morning the final terms of a big Wall Street settlement.
Susan Lisovicz live in New York.
So how big is big?
SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: It's huge, Carol, it's $1.4 billion. It is a landmark settlement, and this could bring some solace, not complete solace, to the millions of shareholders who invested in Internet stocks a few years ago and got burned in the process.
Basically what you're going to see this afternoon in Washington is security regulators from around the country announcing the final terms of this settlement. These include the biggest brokerage banks in the nation, Carol, among them, Salomon Smith Barney, Merrill Lynch, Morgan Stanley, Goldman Sachs, Credit Suisse First Boston.
What's really interesting, Carol, is that, according to published reports, three of those banks, or two of those banks, Citigroup and Salomon Smith Barney, are going to be charged with fraud. You haven't seen this kind of seriousness in the wording. Usually they just either admit or deny wrongdoing.
Once they admit fraud, it opens it up to shareholder lawsuits. That could bring in, by some estimates, an additional $3.5 billion in penalties. That's just one estimate. A lot going on here.
The heart of the investigation, Carol, as you know, involved research where these research analysts were hyping stocks that, in some cases, they were privately ridiculing. They were just trying to win very lucrative investment banking business with the same firms that they were hyping. So a very big day on Wall Street.
COSTELLO: Yes, I was just going to ask you how much of that would go to investors, but you answered my question because shareholders will probably sue now, too.
LISOVICZ: Right, and this $1.4 billion is expected to fund independent research so that when investors are looking at a stock that they can find some credibility from these research reports.
COSTELLO: That's scary because there are a lot of angry investors out there.
LISOVICZ: There sure are and they may express it in the courts down the road.
COSTELLO: Definitely so.
Susan Lisovicz, we'll get back to you later.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
