Ex-Credit Suisse Banker ArrestedApr 23, 2003 | USA TODAY Frank Quattrone, the most powerful dealmaker of the Internet era, is vowing to fight after being arrested Wednesday on charges of obstructing justice in a federal probe into initial public offerings.
The 47-year-old former head of Credit Suisse First Boston's powerhouse high-tech investment-banking unit surrendered to FBI agents at 8 a.m. after prosecutors decided to file a three-count federal complaint accusing Quattrone of impeding an investigation into whether he channeled shares of hot IPOs to favored clients, known as "Friends of Frank."
Quattrone defense lawyer John Keker promised to push for a jury trial, setting up what could be the most-watched Wall Street criminal case since junk bond king Michael Milken agreed to serve jail time in 1991.
"Only prosecutors who see the world through dirty windows would take a one-sentence e-mail supporting company policy and try to turn it into a federal criminal case," said Keker, who also represents former Enron CFO Andrew Fastow.
The charges stem from an e-mail Quattrone sent on Dec. 5, 2000, titled "time to clean up those files." CSFB maintains in-house lawyer David Brodsky notified Quattrone of an ongoing federal investigation two days earlier.
U.S. Attorney James Comey said the criminal charges, which carry a maximum of 10 years in prison, should caution Wall Street against "throwing roadblocks in the way of the investigators." (Related: Criminal complaint (U.S. v. Frank Quattrone))
Looking somber, Quattrone remained silent during a five-minute appearance in Manhattan federal court. The high-tech kingmaker, who earned $100 million a year at the height of the Internet stock craze, was released on his own recognizance after agreeing to surrender his passport.
Quattrone is the only senior executive to be charged with a crime since state and federal prosecutors first launched probes into alleged Wall Street misdeeds three years ago. After luring Quattrone with a hefty pay package and the promise of complete autonomy in 1998, CSFB quickly dominated dot-com stock sales and mergers. It accounted for 15% of total revenue.
"This case doesn't do investors any good," says veteran securities lawyer Saul Cohen. "The real story is that Quattrone was given unprecedented control of banking and research, and regulators ignored the obvious conflicts."
Friends in Silicon Valley defended Quattrone. Venture capitalist Sandy Robertson says, "He was dragged through the mud with the 'Friends of Frank' list." Adds former Red Herring editor Tony Perkins, "Frank could be the first victim of a witch hunt to put people in orange jumpsuits."