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Franks Friend Still Faithful

Apr
24
2003

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

While the first stage of grieving is denial, Silicon Valley may never come to grips with the arrest of superstar tech banker Frank Quattrone.

“No, come on. Really? Really in jail?” says another banker, describing the reaction he got when he predicted Quattrone would be charged – as he was yesterday – with obstruction of justice and tampering. “These people are in shock,” he said.

“I thought I was pretty jaded about this stuff,” said a former banker who has worked with Quattrone. “But to see Frank – what a bizarre sight seeing Frank on the perp walk.”

The Valley’s refusal to understand why Quattrone has become an accused felon is strong. So as the first banker to face criminal charges and the first Silicon Valley figure of note to feel the wrath of government regulators, Quattrone’s getting a lot of support and sympathy.

“Oh God,” said veteran tech banker Sandy Robertson when told of Quattrone’s arraignment. “I’ll have to defend Frank.” In telling his employees to “clean out those files,” Quattrone did nothing out of the ordinary, Robertson said. “After every deal you always remind people to destroy the files so [famed plaintiffs attorney] Bill Lerach can’t come and sue you. You always have something.”

But what about those “friend of Frank” accounts – the special accounts that made some Silicon Valley entrepreneurs millions of dollars?

Nothing special there, either, says Robertson.

“Frank gave hot stock to his friends, that’s all,” said Robertson, who founded the tech banking firm Robertson Stephens & Co. “He gave hot stock to people who could give him business in return.”

That’s not a wildly held opinion. Some people – especially people at the NASD and at New York Attorney General Eliot Spitzer’s office – think those accounts were little more than bribes.

“It was not outside the philosophy of doing business,” Robertson said. “If you gave [venture capitalist] John Doerr, to pick a name, 10,000 shares, he could probably bring you more business than [mutual fund managers at] Fidelity could over the course of the year.”

After all, stock was the lingua franca of Silicon Valley. Frank was just talking the local talk.

“At the end of the day, the heart and spirit of the Silicon Valley business community is centered around stock ownership,” said Tony Perkins, founder of Red Herring, the magazine that enthusiastically chronicled the stock bubble.
“The people who are at fault are the people who bought stock at a price that was overvalued.”

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