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In fine ‘blogging tradition, I got ‘blogged by my favorite East Coast foil, the always fabulous Elizabeth Spiers who heroically claims greed – specifically banker greed – as an East Coast invention.
She’s right in the sense that it was bankers, not geeks, who realized the millionaire-making potential inherent in the tech business. And, for the most part, that happened just about the time that all those MBA (more specifically all those Harvard MBAs) started showing up in venture capital firms.
It was Frank Quattrone’s particular genius to introduce geeks to large piles of cash at the same time that he stoked their ‘us against the world’ thinking. The cash helps him retain the loyalty of those he’s helped the most. Just take a look at what Cypress Semi’s T.J. Rodgers had to say at the beginning of the summer.
Rodgers is a free market nut. But his thinking isn’t totally flawed. Financial markets, and the people who run them, are regulated because the business of making money makes people greedy. It makes them loose control of their good sense.
Many people in Silicon Valley – particularly the “friends of Frank” who have gotten to see their names in the paper – think they’re getting a raw deal. They have good reason to think so. If the SEC had taken a true interest in what was going on in the valley, they would have flat-out banned spinning bank in 1997 when they first noticed it. That’s Arthur Levitt’s SEC, not some pro-business Republican’s.
If the U.S. Attorney’s office was serious about investigating how the markets were working in this new more open, Internet-driven trading era, they should have done what NY Attorney General Eliot Spitzer did: Get on a plane and go out there and talk to people. But in 2000 they were too busy thinking about hedge funds, not about private banking and IPO allocations. So they stayed in New York and missed the larger picture.
Quattrone’s trial is the interest-due on all this stuff. And, regardless of what happens in the next day or so here in federal court, his troubles are not over. If he’s acquitted, courthouse wisdom says Spitzer will file his own, criminal charges here in New York. If Quattrone is convicted, he still has the NASD to worry about. And Spitzer. And all the private lawsuits.

Share  Posted by Chris Nolan at 8:31 AM | Permalink

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