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CSFB Tech Chief Resigns Amid Scrutiny

Mar 5, 2003 | AP

A former star investment banker with Credit Suisse First Boston resigned Tuesday amid intense regulatory scrutiny and a pending criminal probe into his activities during the dot-com boom.

Frank Quattrone and the firm agreed that it was "in their respective best interests" for him to leave, CSFB said in a statement.

A statement issued by Quattrone's spokesman, Bob Chlopak, said the banker had elected to resign, and now would be able to "devote his time and energy to addressing the issues raised by the various investigations."

Quattrone, 47, once commanded one of the largest paychecks on Wall Street, earning almost $100 million annually at the height of his career. The resignation agreement essentially suspends the legal and financial obligations of his contract with CSFB, with the exception that the firm will continue to pay his legal fees, sources close to the matter said.

Quattrone's resignation comes a week after he declined to testify before the National Association of Securities Dealers, apparently on the advice of his lawyer. The move could prompt the regulatory body to ban him from the securities industry.

CSFB's policies require employees to fully cooperate with regulators. The firm said Tuesday it had not been contacted by the NASD regarding Quattrone's refusal to testify.

Quattrone, who has been on paid administrative leave since last month, wielded enormous influence at the helm of CSFB's technology unit during the late 1990s, presiding over lucrative initial public offerings of companies such as Amazon.com and Netscape Communications Corp.

But as the tech bubble burst in 2000, regulators began taking a closer look at the firm's IPO practices. Regulators shifted their focus to Quattrone earlier this year, and a series of e-mails piqued the interest of criminal investigators.

As chief of CSFB's technology unit, Quattrone held an unusual amount of power in that he oversaw both the bankers who engineered the deals and the analysts who researched the companies involved. CSFB removed the analysts from his supervision in the summer of 2001.

CSFB paid $100 million in late 2001 to settle accusations brought by the Securities and Exchange Commission and the NASD that it had charged inflated commissions to some clients in exchange for access to IPO shares.

At the end of 2002, CSFB agreed to pay another $200 million as part of an industrywide settlement over conflicts of interest between stock research and banking. The NASD notified Quattrone in January that he faced separate action for his involvement in research conflicts and questionable IPO practices.

CSFB seemed to be standing by Quattrone until last month, when a series of e-mails surfaced that apparently showed he knew about the ongoing probes when he sent a message to his staff urging them to "clean up those files."

The message, sent Dec. 5, 2000, was characterized at the time as a routine reminder of the firm's document retention policy. But any pending investigation would have precluded CSFB employees from destroying documents. The firm's legal department sent more e-mails on Dec. 6 and 7 telling employees not to destroy IPO-related material.

A series of internal e-mails made public last month showed that the firm's former in-house lawyer, David Brodsky, had apparently informed Quattrone of the investigations two days earlier — on Dec. 3.

CSFB turned the e-mails over to investigators last month, and Quattrone was placed on leave. Soon after, the Manhattan U.S. attorney's office and New York Attorney General Eliot Spitzer launched criminal probes into possible obstruction of justice charges.

Throughout the investigation, Quattrone has maintained that he did nothing wrong.

"Once again, Mr. Quattrone is innocent," his statement said Tuesday. "At the time he sent his e-mail in December 2000, he was following the document retention policies in force for his technology banking group at CSFB. He did not destroy any documents nor improperly direct others to do so."


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