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CSFB's Quattrone Faces Obstruction Investigation

Feb 4, 2003 | The Wall Street Journal

Wall Street securities firm Credit Suisse First Boston placed star technology-industry banker Frank Quattrone on paid administrative leave Monday as federal prosecutors told CSFB that Mr. Quattrone is facing an obstruction-of-justice probe, people close to the matter told The Wall Street Journal.

The inquiry, by the U.S. attorney's office in Manhattan, focuses on whether Mr. Quattrone knew of regulatory investigations into CSFB's handling of hot new stock offerings when he forwarded a December 2000 e-mail urging his investment- banking staff to purge drafts of notes and other documents from their files.

Mr. Quattrone last week told a CSFB legal official he knew of no such inquiries at the time of the e-mail.

But CSFB, a unit of Credit Suisse Group , said Monday that it placed Mr. Quattrone on paid administrative leave after evidence surfaced that seems to contradict Mr. Quattrone's account. The firm says it found other e-mails between Mr. Quattrone and a senior legal official indicating that he had been advised about the investigations only days before advising technology bankers to "clean up" their files.

"I did nothing wrong," Mr. Quattrone said in a statement. "I am confident the investigation will show that."

CSFB said in a statement that "it has notified the appropriate government and regulatory authorities about the new information learned on Jan. 31 and is cooperating fully with them."

A spokesman for the U.S. attorney's office declined to comment.

The new inquiry is the latest, and potentially most serious, setback for Mr. Quattrone, who in the 1990s was one of the earliest investment bankers to see the coming technology boom and to recognize its potential value for Wall Street. For that foresight, he also was one of the industry's most successful bankers, earning one of the heftiest paychecks on Wall Street, approaching $100 million during the market's height.

But when the issuance of new technology stocks began to fall off, Mr. Quattrone's star dimmed. As a backlash against the boom has grown, he has been hit by regulatory probes, most focusing on CSFB's conduct in allocating initial public offerings of tech companies, and whether published research on tech stocks was influenced by the desire to win investment-banking business from the tech industry. Last week, The Wall Street Journal reported that the National Association of Securities Dealers alerted Mr. Quattrone that he could face civil charges for failing to supervise conflicts involving research analysts and for the allocation of IPOs to favored investment-banking clients leading some people inside the firm to say that it was only a matter time before he was forced to leave CSFB.

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