From Times Online
July 22, 2009

Lehman analyst told to suppress negative research

Michael Herman
Recommend 18

A former analyst at Lehman Brothers was pressurised into burying a piece of negative research relating to a company the bank was attempting to float on the stockmarket, an Employment Tribunal heard today.

Paul Ryb, a telecoms analyst, claimed a senior banker working on the corporate finance side of the deal specifically told him not to send a potentially damaging research note to institutional clients that were being courted to buy shares in the initial public offering (IPO).

The allegations were made as part of Mr Ryb’s case for unfair dismissal from Nomura, the Japanese bank that took over some of Lehman’s European business when it collapsed last year.

The allegations of unethical behaviour relate to Lehman’s role in the 2005 IPO of Telenet, a Belgian telecoms company.

Mr Ryb, a research analyst employed to provide independent advice to clients, said he was planning to send potential investors in the Telenet IPO an unfavourable research note about a similar business.

He claimed Paul Norris, then Lehman’s industry group leader for telecoms, who was advising Telenet on the IPO, knew this would harm the bank’s attempts to float Telenet and ordered him to suppress it, which he did.

Mr Ryb, 38, made formal complaints about Mr Norris’ alleged behaviour and other alleged unethical practices at Lehman, which like all investment banks is obliged to maintain a Chinese wall between research and investment banking staff.

Mr Ryb's allegations relate to 2005, two years after Lehman and other investment banks promised to separate research and banking after a crackdown by Eliot Spitzer, then New York Attorney-General.

Mr Ryb said his complaints led directly to him being selected for redundancy last year.

Andrew Hochhauser, QC, for Mr Ryb, told the Employment Tribunal today that Lehman Brothers management, now at Nomura, viewed the recent round of redundancies as “an ideal opportunity to get rid of Paul Ryb.â€