Infectious Greed: Restoring Confidence in Americas Companies - page 70


Investment banks play a vital role in the American corporate system. They help firms acquire the capital they need to expand business operations. This expansion contributes to the growth in economic activity, wealth, and job creation in a capitalistic economy. However, capital is a scarce commodity. Not every person or firm that wants more money deserves to get it. Investment banks are the gatekeepers. They must be sure to conduct due diligence activities and only bring quality firms and security issues to the public. They have failed in recent years . While this chapter has detailed those failures, the next chapter discusses security analysts' failure. These issues are related , as analysts are frequently part of an investment bank.


  1. This history is adapted from Charles Geisst, Wall Street (New York: Oxford University Press, 1997).

  1. David S. Kidwell, Richard Peterson, David W. Blackwell, and David Whidbee, Financial Institutions, Markets, and Money , 8th ed. (Hoboken, NJ: John Wiley & Sons, 2002).

  1. Heather Timmons, "Citi's Sleepless Nights," BusinessWeek , August 5, 2002, pp. 42 “43.

  1. Jay Ritter and Ivo Welch, "A Review of IPO Activity, Pricing, and Allocations," Journal of Finance 57, no. 4 (2002): 1795 “1828.

  1. Alexander Ljungqvist and William Wilhelm, "IPO Allocations: Discriminatory or Discretionary?" Journal of Financial Economics 65, no. 2 (2002): 167 “201.

  1. Andrew Ross Sorkin, "Just Who Brought Those Duds to Market?" New York Times , April 15, 2001, p. C1.

  1. Peter Elstrom, "The Great Internet Money Game," BusinessWeek , April 26, 2001, p. 16.

  1. Susan Pulliam and Randall Smith, "Sharing the Wealth: At CSFB, Lush Profit Earned on IPOs Found Its Way Back to Firm," Wall Street Journal , November 30, 2001, p. A1.

  1. Susan Pulliam, Randall Smith, Anita Raghavan, and Gregory Zuckerman, "Coming to Terms: CSFB to Pay $100 Million to Settle Twin IPO Investigations," Wall Street Journal , December 11, 2001, p. A1.

  1. Daniel Quin Mills, Buy, Lie, and Sell High (Upper Saddle River, NJ: Financial Times Prentice Hall, 2002).

  1. Michael Siconolfi, "'Spinning' of Hot IPOs Is Probed," Wall Street Journal , April 16, 1998, p. C1.

  1. Susanne Craig and Charles Gasparino, "Salomon IPO Suit Claims Special Accounts Were Used," Wall Street Journal , July 19, 2002, p. C1.

  1. Tom Hamburger, Susan Pulliam, and Susanne Craig, "Salomon IPO Deals Provoke Congress," Wall Street Journal , August 29, 2002, p. C1.

  1. Peter Fusaro and Ross Miller, What Went Wrong at Enron (Hoboken, NJ: John Wiley & Sons, 2002).

  1. Peter Behr and April Witt, "Visionary's Dream Led to Risky Business," Washington Post , July 28, 2002, p. A1.

  1. April Witt and Peter Behr, "Losses, Conflicts Threaten Survival," Washington Post , July 31, 2002, p. A1.

  1. Randall Smith and Anita Raghavan, "Congress Probes Merrill-Enron Deal," Wall Street Journal , July 30, 2002, p. C1.

  1. Charles Gasparino and Randall Smith, "Merrill Lynch Puts Energy Official on Leave," Wall Street Journal , July 29, 2002, p. C1.

  1. Peter Behr and April Witt, "Hidden Debts, Deals Scuttle Last Chance," Washington Post , August 1, 2002, p. A1.

  1. Kevin Drawbaugh, "Congress Grills Chase, Citi on Enron Prepay Deals," Reuters Business Report , July 23, 2002, 8:47 p.m.

  1. Paul Beckett and Jathon Sapsford, "Energy Deals Made $200 Million in Fees for Citigroup, J.P. Morgan," Dow Jones Newswire , July 24, 2002, 1:06 a.m. EST.

  1. Edward Iwata, "Did Banks Play Role in Enron Scandal?" USA Today , July 23, 2002, p. 1B.

  1. Campion Walsh, "Chase, Citigroup Defend 'Prepaid' Deals with Enron," Dow Jones Newswire , July 23, 2002, 7:44 p.m. EST.

  1. Kathleen Day, "2 Big Banks to Insist on Debt Disclosure," Washington Post , August 8, 2002, p. E1.

  1. Jathon Sapsford and Paul Beckett, "Citigroup, J.P. Morgan Marketed Enron-Type Deals to Other Firms," Wall Street Journal , July 23, 2002, p. C13.

  1. David Barboza, "Complex El Paso Partnerships Puzzle Analysts," New York Times , July 23, 2002, p. C1.