Federal Prosecutors plan to criminally charge former star technology-industry investment banker Frank Quattrone following an obstruction- of-justice probe, people familiar with the case told The Wall Street Journal.
The probe was based on his advice to colleagues in late 2000 that they destroy documents amid a regulatory investigation of how Wall Street doles out initial public offerings of stock, these people said.
James Comey, the U.S. attorney in Manhattan, is expected to unveil the charge as early as today. The charge would represent the only criminal action to be taken so far against any of the Wall Street bankers and analysts whose actions during the stock-market bubble have been the subject of regulatory scrutiny. It isn’t clear whether the action by prosecutors will include an indictment, an arrest, or a complaint filed against Mr. Quattrone, or some combination of the three.
The expected announcement comes just days before the formal unveiling of a separate set of civil charges by several regulators that investment bankers, including Mr. Quattrone, wielded undue influence over stock-market research during the bubble years 1999-2000.
Amid the obstruction probe, Mr. Quattrone’s former employer, Credit Suisse Group’s Credit Suisse First Boston, placed the banker on paid leave Feb. 3, 2003. He was forced to resign on March 4, 2003.
Mr. Quattrone in February said in a statement about the document issue: “I did nothing wrong. I am confident the investigation will show that.” Mr. Quattrone told his CSFB colleagues that in sending his December 2000 document cleanup e- mail, he merely wanted to alert executives to the firm’s routine policy on disposing of paperwork.
Mr. Quattrone initially escaped charges in the now-completed investigation by securities regulators and federal prosecutors of how CSFB allocated IPOs in 1999 and 2000 and whether the firm demanded that its clients share their IPO profits with the firm.
CSFB settled the charges in January 2002, without admitting or denying wrongdoing, by paying $100 million in penalties to the Securities and Exchange Commission and the National Association of Securities Dealers, which had conducted the probe. Even before that investigation ended, CSFB’s chief executive, John Mack, had given Mr. Quattrone a clean bill of health.
But the current obstruction investigation only heated up in late January of this year, a full year later, after e-mails surfaced which had been withheld during the original investigation based on attorney-client privilege. The e- mails showed that Mr. Quattrone had been updated on the IPO probes and related subpoenas just before he urged bankers in his group to “clean up” their files.
Lawyers and press representatives for Mr. Quattrone didn’t return calls yesterday. A spokeswoman for CSFB declined to comment. Michael Kulstad, a spokesman for the U.S. attorney’s office, declined to comment.