The disclosure that US regulators plan to file civil charges against Frank Quattrone, Credit Suisse First Boston’s star technology banker, heralds what is likely to be a flurry of new cases against prominent Wall Street figures.
Unlike last year’s Wall Street crusade, which was led by Eliot Spitzer, the New York attorney-general, the next round of cases will involve the National Association of Securities Dealers, a self-regulatory organisation.
The NASD appears intent on restoring its credibility after Mr Spitzer questioned whether Wall Street could police itself.
“It certainly looks like there was considerable political pressure on the NASD to do more,” said Tom Dewey, a securities lawyer at Dewey Pegno & Kramarsky.
Mr Spitzer’s focus on investment banks’ stock research and initial public offering practices culminated in a more than $1.4bn settlement with the largest investment banks that was revealed in December.
Since then, Mr Spitzer’s staff has begun to pull away from the investigations it helped mount, leaving it up to others to deal with individuals.
Soon after December’s settlement agreement, the NASD filed suit against Robertson Stephens a now shuttered subsidiary of FleetBoston Financial and one of its former analysts.
The NASD plans to bring cases against several more banks and individuals this year for research and IPO abuses despite the settlement, a person familiar with the situation said.
The NASD sent a so-called Wells notice to Mr Quattrone last month, informing him that it intended to file civil charges. Mr Quattrone is preparing his response, and that will set the stage for a final decision by the NASD to file charges. The NASD cited Mr Quattrone for what regulators call a failure to supervise. In part, this stems from Mr Quattrone’s unusual dual role as a supervisor of both bankers and analysts.
“He’s an incredibly attractive target because he was an investment banker who oversaw research, which was pretty unique,” Mr Dewey said.
The NASD notice also said it was considering civil charges stemming from Mr Quattrone’s alleged involvement in “spinning” – allocating shares in initial public offerings to potential investment banking clients.
Mr Quattrone said: “I have upheld the highest standards of professional conduct in my work and have complied with all rules and regulations. CSFB has found no evidence of wrongdoing on my part.
“While I cannot comment in detail regarding any ongoing investigation, I will co-operate fully with any regulatory inquiry and am confident that the truth will prevail.”
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