Frank P. Quattrone, the Credit Suisse First Boston Corp. banker who became a star during the Internet boom, quit today in the face allegations that he destroyed documents to obstruct an investigation.
New York state Attorney General Eliot L. Spitzer and U.S. Attorney James B. Comey of the Southern District of New York are expected to complete their investigations of Quattrone within weeks, sources familiar with the probes said.
Both are looking at whether Quattrone was trying to interfere with an earlier investigation of CSFB’s handling of initial public offerings of stock when he and a subordinate sent out on Dec. 4 and 5, 2000, e-mails urging employees to “clean up those files.” Spitzer has also been investigating whether New York securities-fraud laws were broken.
NASD has already warned Quattrone that it plans to seek civil charges against him stemming from his unusual role as supervisor of both CSFB’s technology analysts and its bankers. Quattrone recently ran afoul of the self-regulatory body’s rules by refusing to give testimony to investigators and could be barred from the securities industry, other sources said.
In the late 1990s, Quattrone seemed to personify the Internet technology boom, bringing dozens of companies public by selling their stocks, which then often soared. But after the tech bubble burst, he became the target for regulators, prosecutors and internal investigators at CSFB.
His departure follows the exit of other high-profile analysts, including Jack Grubman, formerly of Citigroup Inc.’s Salomon Smith Barney, and Henry Blodget, formerly of Merrill Lynch & Co., who have been accused of giving glowing reports they did not believe. And it comes as major Wall Street firms, battered by conflict-of-interest probes and massive investor flight, have agreed to demands by regulators and prosecutors that they pay huge fines and fundamentally change the way they do business.
CSFB suspended Quattrone last month after learning that he had been told of a grand jury subpoena two days before he sent an e-mail endorsing the “clean up” memo.
The company said in a statement that it and Quattrone “have agreed that it was in their respective best interests for Mr. Quattrone to separate from the firm at this time.”
With his resignation, Quattrone has adopted a new aggressive stance, enlisting a public relations team that put out a more extensive statement, which said, in part: “The separation and independence will enable Mr. Quattrone to devote his time and energy to addressing the issues raised by the various investigations. Mr. Quattrone is innocent. At the time he sent his email in December 2000, he was following the document retention policies in force for his technology banking group at CSFB. He did not destroy any documents nor improperly direct others to do so.”
A Quattrone spokesman said CSFB was under constant investigations and subpoena in 2000 but the firm never told Quattrone’s group to suspend its rules requiring bankers to destroy unnecessary documents after deals were completed.
Quattrone and CSFB have agreed to wait until after the investigations are complete to work out his severance package and other financial and legal arrangements. His technology banking team, many of whose members came with him from Deutsche Bank AG in 1998, will continue to work at CSFB.