Frank Quattrone may yet beat the rap against him. He’s a smart guy, and he’s got a smart lawyer.
But the details unveiled Wednesday suggest that he parsed the truth too thinly ever to be vindicated in the court of common sense.
Whatever the outcome, he’ll be known as the banker who sent out an e-mail urging destruction of documents shortly after learning that he needed a criminal lawyer.
And for all his smarts, he’ll be known as the guy tripped up by the new millennium’s version of the Watergate tapes: a litany of damning e-mail.
Part of Quattrone’s defense is that his controversial two-line e-mail endorsing shredding was a hastily written afterthought in a long day. But one earlier exchange indicates that he knew he was dealing with explosive stuff.
On Dec. 4, 2000, a lawyer for CSFB’s technology group, Richard Char whose title is shortened to “Head of Execution” in the federal complaint sent an e-mail to four senior officers of the technology group suggesting a memo on destroying documents.
“Today, it’s administrative housekeeping,” Char joked lightheartedly. “In January, it could be improper destruction of evidence.”
Quattrone obviously didn’t think that was so funny. About three minutes later, he replied via e-mail, “You shouldn’t make jokes like that on e-mail!”
But from Quattrone’s point of view, the e-mail trail only got more damning. And to understand the case, it’s worth recounting the litany:
â€¢ Dec. 3, 2002: A lawyer for CSFB, David Brodsky, alerts Quattrone via e-mail that a federal grand jury is looking into the firm’s IPO allocations. E-mails show that Quattrone already knew about Securities and Exchange Commission and NASD investigations.
â€¢ Dec. 4: Char sends a memo urging CSFB’s technology bankers to destroy unneeded documents. Quattrone begins to draft but does not send his own memo.
â€¢ Dec. 5: Brodsky and Quattrone talk about the federal investigation. Brodsky recalls telling Quattrone he needs a criminal lawyer. Later that evening, Quattrone sends out his own two-line e-mail endorsing the Char memo.
â€¢ Jan. 27, 2003: Quattrone tells CSFB’s vice chairman, Gary Lynch, that he was unaware of pending SEC and NASD investigations when he sent his crucial Dec. 5 e-mail.
One of Quattrone’s central defenses is that while he knew about the federal investigation into the allocation of IPOs, that didn’t apply to his investment bankers, whose job was to put deals together. Hence they could shred.
But this is a tenuous argument at best. In the first place, NASD regulators found that Quattrone did participate in talking about who should get favored IPO shares.
And second, the e-mail traffic shows that Quattrone knew the requests from investigators were broad. Put yourself in the shoes of federal prosecutors. You’re interested in knowing how the firm rewarded favored customers. You want to know about the “Friends of Frank.” Do you accept that hairsplitting? No.
I’ve written sympathetically about Frank Quattrone before. I still believe that in some way, he’s a scapegoat.
But he made a fatal mistake here. He cut corners too closely not just with a gullible public, but with federal prosecutors and CSFB’s own Lynch. And not surprisingly, they’ve taken it personally.