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CSFB's Quattrone Got Early Warning of IPO Probes

Feb 27, 2003 | Wall Street Journal Frank Quattrone, Credit Suisse First Boston's investment-banking star, was apprised of three regulatory inquiries, including a criminal probe, into the firm's IPO practices days before he urged colleagues to purge files, Thursday's Wall Street Journal reported.

In a series of e-mails on Dec. 3, 2000, the securities firm's in-house lawyer David Brodsky informed Mr. Quattrone about the investigations into the underwriting of technology stocks by CSFB, a unit of Credit Suisse Group (CSR). The e-mails were sent two days before Mr. Quattrone, in a Dec. 5 e-mail, urged CSFB bankers to follow the advice of a CSFB banker to dispose of notes, valuation analyses and other internal memos to protect the firm against lawsuits resulting from the bursting of the technology-stock bubble.

Mr. Quattrone was put on administrative leave by CSFB earlier this month. CSFB, like every major securities firm, has policies encouraging the destruction of documents related to investment-banking deals. But such destruction is strictly forbidden once a lawsuit or investigation has begun. Under federal and New York State securities laws, individuals and firms can be charged with obstructing justice, a criminal offense, for destroying evidence during an investigation.

A spokesman for Mr. Quattrone had no comment on the e-mail exchange, but noted that Mr. Quattrone in the past has denied doing anything improper.

"I did nothing wrong," Mr. Quattrone said in a statement when he was placed on administrative leave. "I am confident the investigation will show that." Neither CSFB nor Mr. Brodsky had any comment.

The e-mails appear to provide evidence that Mr. Quattrone was informed about the scope and significance of the investigations before he advised employees to destroy some of their deal documents. The e-mails are a key piece of evidence for prosecutors at the U.S. attorney's office in Manhattan and the New York Attorney General's office, which are investigating whether Mr. Quattrone obstructed justice in the matter.

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