Liability Not Limited to Dismissal - Allen Wheat - Brief Article

Chief Executive, The, Oct, 2001 by Sandy Kemper

ALLEN WHEAT, 53, was fired from Credit Suisse First Boston in July amid charges that the investment banking group, along with other Wall Street firms, conspired to fix fees for initial public offerings and manipulated the IPO market. Wheat was succeeded by John Mack, 56, former president and COO of Morgan Stanley Dean Witter.

Wheat's tenure is marked by several disappointments in CSFB's overseas business, including a $2-billion loss in Russia, a revoked license in Japan, and a suspended license in India.

But in a larger context, Wheat is a casualty of the sharp scrutiny the Securities and Exchange Commission and the courts are leveling on investment and brokerage firms and their close relationships with the companies they serve.

While Wheat himself isn't going to jail, in this climate being sacked isn't the worst fate to befall a CEO. High-level executives run the risk of being held personally accountable by the courts for company infractions.

"The question is whether there was a process in place reasonably designed to prevent problems," says Neil Lang, a former SEC enforcer and current partner with the law firm Sutherland Asbill & Brennan in Washington, DC.

The SEC isn't sympathic to CEOs who claim they're "too busy" to troubleshoot, says Lang, nor does it help that you personally committed no wrongdoing. "I think you'll see an increased tendency to go after people who are in a position to stop abuses," he predicts.

Sandy Kemper, founder and CEO of online banking services firm eScout and former chairman and CEO of UMB Bank.