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Fingering Frank

Oct
4
2003

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

Frank Quattrone was rich, in charge and warned repeatedly about the consequences of various federal government investigations of his bank.

That’s what David Brodsky, former general counsel for Credit Suisse First Boston, the investment bank that employed Quattrone as head of its Palo Alto, Calif., tech banking division told a court yesterday.

Brodsky is a key witness against Quattrone, who is charged with obstruction of justice. In his testimony, Brodsky detailed CSFB’s interactions with the U.S. Attorney’s office, the Securities and Exchange Commission and the NASD.

Quattrone declined to comment on the day’s proceedings, which included a look at his compensation records showing that in 1999 and 2003 he made more than $200 million in cash and stock options.

Quattrone spokesman Bob Chlopak said the government had not established proof that Quattrone knew the investigations could focus on him or any of his activities.

CSFB was more concerned about the bad press it might receive if word of the investigations became public than it was about its employees obeying the law, Chlopak said.

The grand jury investigation — looking at whether or not CSFB charged some of its clients higher than normal commissions for share-allocations of hot initial public offerings — was the most troublesome of all the probes facing the bank, Brodsky said.

“Without getting overly dramatic about it, the federal grand jury investigation took this to a totally new level of danger to CSFB,” Brodsky said.

“A possible indictment of the bank could put the bank out of business — or at least severely cripple the bank,” he said. “This was very serious.”

Brody said he told Quattrone of that investigation in an email exchange on Dec. 3.

He said he was concerned that any look at the bank’s IPO business would eventually focus on Quattrone, head of the bank’s semiautonomous tech group.

“CSFB’s business was being threatened,” Brodsky said. “Frank Quattrone’s business that he had spent a lot of time building up was threatened. I wanted him to understand that.”

The next day, Richard Char, a banker at CSFB’s tech division sent an e-mail telling employees to “clean out those files.”

On Dec. 5, Quattrone endorsed that sentiment and resent the e-mail to his division.

The government maintains that Quattrone was attempting to obstruct justice when he sent that message because he should have known that all of the bank’s records needed to be preserved for investigators.

Meanwhile, with the trial only a week old, Frank Quattrone’s defense attorney John Keker is already getting hot under the collar.

Angered that Quattrone’s compensation records were made public during yesterday’s testimony by Brodsky, Keker made a point of telling reporters at the trial what he thought.

“I called it ‘a ploy and a cheap shot’ on the record,” Keker said, referring to numerous conferences he and prosecuting attorneys have had outside the jury’s hearing.

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