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CSFB Set To Cut Quattrone Loose

Mar
4
2003

Editor’s Note:This post originally appeared as a news story in The New York Post.

Frank Quattrone, once Credit Suisse First Boston’s star tech banker, will likely be out of a job soon.

CSFB reacted strongly to Quattrone’s failure to appear for an interview last week with the National Association of Securities Dealers, the Washington, D.C.-based regulatory agency that oversees those who buy, sell and issue securities.

“CSFB’s policy requires an employee’s full cooperation with regulators,” the bank said yesterday in a terse statement.

“If we are notified by regulators that an employee is not cooperating, the firm will take appropriate action.”
Quattrone was said yesterday to be negotiating the terms under which he would be leaving CSFB.

He has been on paid leave since the beginning of the month, when CSFB’s general counsel Gary Lynch learned Quattrone knew of a federal investigation of the bank when he sent an e-mail entitled “time to clean out those files.”
That e-mail, sent on Dec. 5, 2000, was circulated to CSFB employees in Palo Alto the day before investigations by the Securities and Exchange Commission and U.S. Attorney became public.

A Quattrone spokesman said the timing of the December 2000 e-mail was coincidental.

Skipping the NASD interview may spell bigger trouble for Quattrone.

In light of his failure to appear, the NASD is considering banning Quattrone from the securities business. The agency is investigating Quattrone’s failure to more closely supervise the 300 analysts and bankers working for him in CSFB’s tech practice based in Palo Alto, Calif.

He has talked to regulators on other occasions, but now, facing the possibility of criminal charges by the New York Attorney General’s office and the U.S. Attorney’s office in Manhattan, Quattrone was advised by his lawyers to avoid the NASD interview.

The “free ranging” discussions that might take place with NASD investigators could help anyone investigating criminal charges, according to a Quattrone spokesman.

NASD regulators are also looking at the “friend of Frank” accounts established for some 160 CEOs, executives and other influential Silicon Valley insiders, to see if
Quattrone may have “spun” hot IPO stocks to his “friends” in return for their agreeing to do business with the bank.
Quattrone appears to be taking on CSFB in a fight to stay out of jail, maintaining it was CSFB’s responsibility to notify employees of their responsibility to keep and maintain documents in light of the investigations.

Quattrone didn’t destroy any documents in December 2000, nor did he encourage anyone to do so, nor did he have any intentions of obstructing any inquiry, according to statements made by his representatives.

Quattrone’s advocates say the banker had no dealings with the brokerage side of CSFB’s business – the New York-based part of the bank that was facing a federal investigation in late 2000.

That investigation into IPO and other allocations focused on the brokerage business – selling stock – not on the underwriting business, which Quattrone managed. “Those are two different sides of the business,” Quattrone’s spokesman noted.

Until recently, CSFB took a similar approach, saying that Quattrone had nothing to do with allocation of IPOs. But the bank has not repeated that assertion, made by its former management, in some time.

Share  Posted by Chris Nolan at 10:02 PM | Permalink

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