Frank Quattrone, the embattled Credit Suisse First Boston banker who was once the darling of his firm and a star in technology finance, resigned from the investment bank Tuesday in a dispute over his failure to appear at a civil deposition.
The New York firm put out a terse statement Tuesday morning saying that Quattrone, who headed CSFB’s technology banking group in Palo Alto, had resigned effective immediately.
The company added that the two sides had concluded “it was in their respective best interests for Mr. Quattrone to separate from the firm at this time.”
CSFB suspended Quattrone last month after the firm found evidence that he had been informed of regulatory inquiries into the allocation practices of initial public offerings at the time he and a subordinate encouraged employees to destroy documents related to investment banking deals.
Although many businesses routinely destroy documents, those practices are supposed to be suspended when the documents are subject to legal or regulatory proceedings.
The actions have become the subject of criminal obstruction of justice investigations by the U.S. attorney’s office in New York and Eliot Spitzer, the New York state attorney general.
Quattrone was asked by the National Association of Securities Dealers to appear for a civil deposition last week, but his lawyers counseled him not to appear, according to people familiar with the matter.
CSFB executives felt that his failure to appear for the deposition conflicted with the firm’s policy of cooperating with official investigations, the sources said.
Quattrone’s departure marks another chapter in a saga, now in its third year, of the once high-flying banker and his powerhouse technology underwriting team.
CSFB’s technology stock underwriting practices have been under examination by various regulatory agencies since May 2000 over allegations ranging from demands for kickbacks from investors who got hot IPO stocks, to pushing rosy investment research on companies it was hoping to woo for corporate finance business.
CSFB paid a $100 million fine to settle the IPO inquiry last year; Quattrone was not named in that action.
Until recently, the firm stuck by its star banker, who helped catapult it to the top ranks of investment banks that underwrote tech companies in the booming stock market of the late 1990s.
The market decline in those stocks is now in its third year, with little sign of a rebound. Similarly, the relationship between Quat-
trone and CSFB has deteriorated.
A spokesman for Quattrone said that he agreed to resign and that all legal and financial issues between him and the firm, such as compensation settlement,
would be set aside until the legal matters are resolved. CSFB will pick up his legal tab, per his contract.
“Once again, Mr. Quattrone is innocent,” the spokesman, Bob Chlopak, said in a prepared statement.
“At the time he sent his e-mail 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.”
Last month, Quattrone was suspended after the disclosure of e-mails between him and CSFB’s former general counsel for the Americas, David Brodsky. The e- mails showed that Quattrone had been apprised by Brodsky that the Securities and Exchange Commission, the NASD and a federal grand jury were investigating the company’s stock allocation practices.
The firm said that when Quattrone was questioned last month by Gary Lynch, CSFB’s global general counsel, he denied knowledge of the investigations at the time the document destruction e-mails were sent. Lynch is a former SEC chief.
In an interview, Chlopak said CSFB had not ordered Quattrone or anyone in the technology group to preserve documents for pending litigation or inquiries when the e-mails were sent.
He also said that on at least three earlier occasions in 2000, various CSFB officials had implored the technology group to destroy all documents except for the minimum amount necessary to keep in deal files.