Lawyers for Frank Quattrone, the embattled investment banker who managed many of Silicon Valley’s technology-boom deals, went on the offensive Thursday as more details emerged about what he knew about a federal probe when he helped encourage employees to “clean up” their files in late 2000.
Quattrone, who headed one of the most sought-after investment banking teams at Credit Suisse First Boston in Palo Alto, is being investigated by New York prosecutors for possible obstruction of justice. Key evidence in the investigation is a series of e-mails from December 2000, including one from a lawyer in Quattrone’s technology group and one from Quattrone, that reminded employees of the firm’s policy to remove certain documents from deal files.
Prosecutors are trying to determine if Quattrone’s intention was to destroy documents that might be sought in a federal grand-jury probe in progress at the time.
Quattrone has commented little beyond terse statements of innocence since the investigation began. In a rare public statement Thursday, Quattrone’s lawyer in the criminal investigation defended his client.
“When all the evidence is considered,” said Elliot R. Peters, “it will be proven that Mr. Quattrone had no intent to obstruct an investigation, did not personally destroy any documents and that at the time of his e-mail, Credit Suisse had not notified Mr. Quattrone or his tech group of the change in CSFB’s document-retention policy.”
E-mail central to case
Peters contended that the central e-mail in the case, from Quattrone, was little more than a hastily written afterthought reinforcing another employee’s suggestion to “clean up” files.
The central e-mail in the probe is a two-line e-mail sent at 6:28 p.m. Dec. 5, 2000, from Quattrone to technology investment-banking employees. In it, he endorsed the advice contained in a lengthier e-mail, sent the previous evening from tech-group lawyer Richard Char, that employees “clean up” their files. In his e-mail, Char said he was expecting a wave of shareholder lawsuits due to the tech-stock downturn, so employees should not keep any extraneous notes, marketing materials or drafts in their files that could provide fodder for such lawsuits.
Critics have focused on the fact that Quattrone’s e-mail was sent only two days after he had learned that the firm was the subject of a federal grand-jury investigation, which typically requires a firm to stop all document destruction, even the routine sort.
Quattrone on leave
Although the e-mailing took place more than two years ago, Credit Suisse put Quattrone on paid administrative leave at the end of last month, shortly after news reports about the e-mail started. Credit Suisse did so after Quattrone told the firm’s current general counsel, Gary Lynch, that at the time he sent the e-mail, he wasn’t aware of any probe that would have made the advice improper.
Shortly after that conversation, Credit Suisse officials uncovered a Dec. 3 e-mail exchange two days before Quattrone’s e-mail to employees between Quattrone and the firm’s former general counsel, David Brodsky, showing that Quattrone did in fact know about the probes.
People close to Quattrone have contended that one reason Quattrone didn’t recall knowing about the grand-jury probe is because he would have assumed that such an investigation would affect only employees in the firm’s stock-broker division which handles the allocation of IPO shares not the investment-banking division, which Quattrone heads.
Moreover, Quattrone’s legal team said that the responsibility for regulating when employees retained or destroyed documents lay with the firm’s legal department, which at the time had failed to properly notify employees in Quattrone’s group that they should stop normal document-culling procedures in the wake of the grand-jury probe.
Facing uphill battle
Still, some legal experts have said that Quattrone faces an uphill battle to persuade regulators that there was no connection between his learning about the federal probe and his clean-up advice two days later. Several saw similarities to the damaging document-retention reminder that wound up convicting the accounting firm Arthur Andersen of obstruction of justice. In that case, an in-house lawyer, Nancy Temple, sent out a reminder to staff to follow routine document-destruction policies just as regulators were closing in.
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