Frank Quat-trone, the former head of Credit Suisse First Boston’s technology banking unit, was charged by federal prosecutors with obstructing justice, the securities industry’s highest profile criminal case since Michael Milken went to prison in 1991.
A three-count federal complaint claimed Quattrone told subordinates to destroy evidence related to an investigation into whether he channeled shares of initial public offerings to favored clients.
His Silicon Valley unit managed the most computer-related stock sales at the height of the Internet boom, generating as much as 15 percent of -CSFB revenue.
His lawyer, John Keker, said Quattrone is innocent.
Quattrone “did more damage to investor confidence than Milken,” said Frank Partnoy, a University of San Diego law professor and author of Infectious Greed.
“Quattrone was the central player and the highest-paid participant” in the market for technology stocks.
The NASD, the securities industry’s watchdog, demanded that Quattrone return $200 million it said he earned between 1998 and 2001.
Quattrone, who supervised both technology research and share sales, quit Credit Suisse two days before the NASD alleged on March 6 that he was blocking its probe of IPO sales.
Quattrone is the first Wall Street executive charged with a crime growing out of the IPO investigations that began in 2000.
Quattrone surrendered to the FBI Wednesday morning in New York. He was released following a five-minute appearance in a Manhattan federal court.
U.S. Magistrate Theodore Katz required him to surrender his passport and barred him from traveling outside the United States.
He didn’t enter a plea. His next court appearance was scheduled for May 13.
Quattrone faces a maximum sentence of 10 years.
“The charges are wrong, and they are unfair,” said Keker, who also represents former Enron Corp. Chief Financial Officer Andrew Fastow.
The criminal charges against Quattrone stem from his advice to CSFB subordinates in late 2000. He’s accused of urging them to destroy documents as investigators examined whether favored clients, so-called Friends of Frank were awarded IPO shares ahead of other investors.
“The investigation has revealed that numerous CSFB documents were destroyed,” FBI Special Agent Kathleen Queally said in the complaint.
CSFB in January discovered a Dec. 3, 2000, e-mail in which then General Counsel David Brodsky informed Quattrone that the firm was under investigation by securities regulators and federal prosecutors.
The e-mail contradicted Quattrone’s earlier statement that he was unaware of the probe when he told employees on Dec. 4, 2000, to dispose of documents related to IPOs.