A New York federal grand jury on Monday indicted Frank Quattrone, the former head of technology investment banking at Credit Suisse First Boston, for encouraging subordinates to destroy documents during official inquiries into the firm’s IPO allocation practices.
Quattrone, 47, of Los Altos Hills, ran CSFB’s technology practice from Palo Alto. He was charged with one count each of obstruction of justice, witness tampering and obstruction of agency proceedings. If convicted, he could face up to 10 years in prison and fines of $250,000.
The allegations are based on the same evidence that federal prosecutors used to charge and arrest Quattrone last month. The indictment is filed after a jury of lay people reviews evidence presented by prosecutors and finds enough probable cause for the case to proceed. Quattrone was released on his own recognizance after his arrest and remains free.
Quattrone’s lawyer, John W. Keker, released a statement Monday saying he would seek a trial on the allegations quickly under the Speedy Trial Act, which entitles a defendant to a trial within 70 days of indictment. He is expected to enter a plea in the case when a judge is assigned to it, possibly later this week or next week.
“Frank Quattrone is innocent,” the statement said. “He is charged with a crime that he did not commit. We are confident the jury verdict will establish Frank’s innocence and reaffirm his honesty and integrity.”
The charges stem from a series of e-mails sent by Quattrone and a subordinate as the Securities and Exchange Commission, a federal grand jury in New York and the National Association of Securities Dealers were investigating how initial public offerings led by CSFB, including shares in softwaremakers Selectica of San Jose and VA Linux of Fremont, were distributed to investors.
Quattrone had been told as early as May 2000 that various agencies were conducting inquiries into the deals and was asked to preserve any documents related to them.
But on Dec. 4, 2000, a subordinate sent out an e-mail to CSFB’s 300-member tech group, titled “Time to clean up those files,” advising employees to destroy all but the final versions of deal documents. The stated goal was to eliminate evidence that would otherwise fall into the hands of plaintiff-side class action lawyers, suing over stocks that had crashed.
The following day, Dec. 5, Quattrone replied to all of the message recipients, and said: “Having been a key witness in a securities litigation case in South Texas istrongly advise you to follow these procedures.”
Quattrone’s defense team maintains that the government evidence does not prove Quattrone ordered the destruction of documents that he knew were relevant to a federal probe. They say Quattrone had only been apprised of the inquiries by the firm’s legal counsel and had not seen the subpoenas.
In the indictment, the government cited a passage from the subordinate’s e- mail that said: “Today, it’s administrative housekeeping. In January, it could be improper destruction of evidence.”
Quattrone responded in an e-mail, saying: “You shouldn’t make jokes like that on e-mail!”
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