An investment banking firm that touted


as a strong buy until the week before its Chapter 11 filing is now putting its weight behind another energy-trading client.

On Tuesday, Credit Suisse First Boston reiterated its strong buy recommendation on

El Paso


, which is currently under fire from investors for its use of off balance sheet financing vehicles that some people say are reminiscent of the ones that toppled Enron.

In issuing his report, CSFB analyst Curt Launer downplayed the recent controversy over El Paso's books as old news and set a $40 price target for the stock, which slipped 35 cents Thursday to $10.75.

"We find the focus of these discussions ... to be disconcerting in that they rely on the 'exception rather than the rule' of the deals El Paso has done," Launer wrote about off balance sheet financing vehicles examined this week by the media. But some observers say it's Launer's record in rating theenergy trading stocks, particularly the ones his firm counts as clients, that's disconcerting.


Launer issued his opinion at a time when his firm is enjoying lucrative investment banking business from El Paso. Earlier this summer, CSFB was the joint book-running manager with

J.P. Morgan Chase

on a $1.5 billion public securities offering for El Paso. The firm has collected additional investment banking fees from El Paso in the last 12 months and expects tosecure new investment banking business from the company in the next quarter. Launer himself receives compensation based in part on revenue generated frominvestment banking clients.

The report comes as legislators probe apparent conflicts of interest on Wall Street and the effect of investment banking relationships on brokerage firms' research efforts.

One Wall Street critic accused CSFB and its analysts of profiting at the expense of investors who take their advice.

"Add up all those fees," he said, "and it's easy to see who made money and who lost it." Neither Launer nor El Paso returned repeated calls seeking comment.

Sea Change

Investors who have consistently listened to Launer on the subject of El Paso certainly haven't made much money. The analyst initiated coverage of El Paso in late 2000, when the stock was $62, and has maintained that rating ever since.

But in the meantime, the fortunes of the energy-trading business have verydefinitely changed for the worse, what with cash growing scarce, debt loads looming and the companies' business and accounting practices being scrutinized by regulators and government investigators.

El Paso hasn't been CSFB's only big energy-trading client. CSFB executed at least five lucrative bankingtransactions for Enron in recent years as well. Andwhen Enron's stock began to fall -- tumbling from $80to $40 in less than a year -- Launer stepped forwardlast August to reiterate his strong buyrecommendation. That was just two months before thecompany shocked Wall Street in October with a $1billion charge that led to the stock's collapse,culminating in a Dec. 2 bankruptcy filing.

Launer clung to his Enron recommendation for months,finally lowering his outlook to hold less than a weekbefore Enron filed for bankruptcy and wiped out shareholders of itscommon stock.

CSFB doesn't appear to be equally smitten withall the energy traders, however. The firm has downgradedat least one energy trader in recent days. This week,Launer reduced


(WMB) - Get Report

from strong buy to holdafter liquidity problems and share price erosion --the stock briefly dipped below $1 Wednesday before bouncing back to around a dollar and change -- sparkedinvestor fears about a possible bankruptcy.Disclosures in Launer's downgrade indicate that CSFBhas performed no recent investment banking servicesfor Williams and doesn't expect to in the near future.

In contrast, Launer continues to rate



a strong buy, despite liquidity andbankruptcy fears similar to those clouding Williams'future. Since Launer last rated Dynegy a strong buy,the stock has tumbled more than 80%, to 75 cents a share.

Dynegy bonds, issued in February with assistancefrom CSFB, have also fared poorly. Six months afterCSFB collected banking fees to manage the $500 millionbond deal, Dynegy's 8.25% notes due 2012 are tradingat only 40 cents on the dollar.