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Credit Suisse replaces CEO Wheat

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NEW YORK — The chief executive of Credit Suisse Group's investment banking division was ousted Thursday amid a government probe into how the firm allocated initial public stock offerings during the tech-stock boom.

Allen Wheat, 53, was replaced by former Morgan Stanley Dean Witter & Co. president and chief operating officer John Mack, the company said. Mack, 56, left Morgan Stanley in March, reportedly after a dispute over when he would become the company's chief executive.

Wheat, who joined Credit Suisse in 1990, will "pursue other interests," the company said in a statement.

The changes were not related to investigations into Credit Suisse practices with IPOs, said Lukas Muhlemann, Credit Suisse Group's chairman and chief executive.

"This has nothing to do with this investigation or any other investigation," Muhlemann said in a conference call with analysts and reporters.

Muhlemann said the decision was made because the investment banking division, Credit Suisse First Boston, needs a new leader who can help it focus its efforts after rapid expansion over the past several years.

He also said he had been talking with Wheat for "some time" about his successor.

Mack's task "is to build a cohesive organization that shares values and behaves in a one-firm way. And yes, if you look at what John Mack has done in his career, he's exactly done that," Muhlemann said.

Credit Suisse, based in Zurich, Switzerland, also said Thursday that it will reduce its corporate structure from four to two operating units.

Credit Suisse First Boston will concentrate on investment banking and asset management, while Credit Suisse Financial Services will oversee private banking and financial services.

Wheat ran CSFB since 1997, helping to build the investment bank into one of the top firms on Wall Street.

Under his tenure, the firm bought rival Donaldson, Lufkin & Jenrette Inc., which helped beef up its global financial presence. The firm also lured highly regarded investment banker Frank Quattrone and his group to CSFB, where they established a technology banking powerhouse and turned CSFB into a prominent underwriter of initial public stock offerings. Quattrone worked for Mack at Morgan Stanley in the mid-1990s.

But it was under Wheat's watch that federal regulators began investigating whether big Wall Street firms, including CSFB, conspired to dictate the highly lucrative fees they charge to arrange for the sale of companies' stock when they go public.

The investigation also includes other aspects of the securities firms' handling of IPOs, such as how they distributed the hot new stock to their best clients, friends and family members of employees.

In addition, dozens of individual investors have sued a number of big Wall Street firms, including CSFB, for allegedly manipulating the IPO market to give their best clients favorable prices at the expense of ordinary investors who couldn't buy the stock until after trading officially began.

CSFB has denied the allegations in the lawsuits.