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Wall St Banker Charged As Clean-Up Bites

Apr 24, 2003 | London Times FRANK QUATTRONE, one of the most prominent bankers during the technology boom, yesterday became the first high-profile adviser to face criminal charges in the regulatory backlash against Wall Street excess during the dot-com bubble.

Mr Quattrone surrendered to the Federal Bureau of Investigation as his former employer, Credit Suisse First Boston, finally signed up to Eliot Spitzer’s settlement over Wall Street sleaze. Mr Spitzer, the New York attorney-general, has been leading a high-profile campaign against Wall Street firms.

Mr Quattrone, who headed CSFB’s technology group in California, was charged by federal prosecutors with obstructing investigations and tampering with witnesses.

His arrest, the biggest since charges were laid against Nick Leeson, the rogue trader who brought down Barings Bank in 1995, could herald a spate of similar charges against Wall Street bankers.

The former star banker, famous for his handlebar moustache and a taste for Château d’Yquem, is accused of hindering investigations into share allocations by CSFB at the end of the 1990s. Investigators are trying to determine whether Mr Quattrone was aware of an investigation by the US Securities and Exchange Commission (SEC), when he ordered colleagues in December 2000 to “clean up” files.

In a 22-page complaint, prosecutors allege that Mr Quattrone obstructed that investigation by the SEC. The banker, who earned bonuses of $15 million during the height of the bull market, was required to give up his passport and was then released. A preliminary hearing was set for May 13.

Mr Quattrone has also been under investigation by Mr Spitzer and other American regulators. His former employer yesterday finally signed the global settlement deal with Mr Spitzer.

A source close to the attorney-general said: “CSFB was the last bank to sign because they had some concerns with the developments regarding Quattrone.”

The source added: “They asked what was going to happen to him. The settlement document that the bank has drawn up with regulators makes a good deal of references to Mr Quattrone, because his behaviour is so central to the conflicts of interest at that firm.”

Earlier on Wednesday, Quattrone’s attorney, John Keker, said: “Frank Quattrone is innocent. He never obstructed justice. The only way we can prove that is to try this case, which is why we will ask that the jury trial occur at the earliest possible moment.”

Mr Quattrone has said CSFB’s legal department did not direct him or his banking staff to stop adhering to a company policy that allowed documents relating to flotations to be destroyed.

Mr Quattrone’s unit led many of the dot-com flotations of the 1990s. The banker had previously worked with Morgan Stanley and Deutsche Bank. Allegations that Mr Quattrone and his team gave preferential stock offerings to favoured clients of CSFB a process known as spinning have dogged Mr Quattrone for years. Until the recent spate of investigations, spinning was technically legal in the US.

Victoria Harmon, CSFB spokeswoman, said the firm had no comment on the charges against Mr Quattrone.

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