CSFB Says Data Tied to Lawsuit Were Lost

Credit Suisse First Boston notified a federal judge Tuesday that it mistakenly taped over about 75 electronic files that the investment banking firm was required to keep as part of a massive class-action suit over Wall Street’s handling of initial public stock offerings.

In a four-page letter sent to Judge Shira A. Scheindlin, CSFB’s outside law firm wrote that the brokerage had an “inadvertent loss of data” from recycling “operational backup tapes.” The letter, a copy of which was obtained by The Times, acknowledged that taping over the data violated the judge’s December 2002 document-preservation order.

The “isolated incident” occurred because an employee in the firm’s computer department thought that “every substantive document” on the tape was stored elsewhere, the firm said.

CSFB “apologizes to the court,” the letter said.

A CSFB spokeswoman declined to comment late Tuesday.

The disclosure comes as authorities are investigating whether Frank Quattrone, who ran the firm’s high-tech investment banking practice through the late-’90s bull market, may have sought to obstruct probes into his handling of IPOs.

CSFB suspended Quattrone last week after learning that he may have known that government investigations were underway when he advised employees in an e-mail in 2000 to get rid of certain files. Quattrone has denied any wrongdoing.

The letter Tuesday said the latest incident did not involve any tapes generated by the firm’s Palo Alto office, where Quattrone was based.

The incident also did not involve the loss of any e-mail messages. That is key because incriminating e-mails at several brokerages have been central to the government’s investigation of wrongdoing on Wall Street.

The only documents that appear to have been lost were those that were stored solely on the tapes and were not saved as hard copies, e-mailed to anyone or kept in CSFB’s primary document retention system, according to the letter.

In all, the 75 tapes that were erased were a tiny fraction of the more than 100,000 such backup files CSFB says it has retained.

“We think that it is unlikely that this incident will ultimately affect the quality of information available for discovery in this litigation because there was such a limited amount of data inadvertently lost and there are multiple other potential sources of relevant information,” wrote Robert McCaw, a lawyer at Wilmer Cutler & Pickering who represents CSFB.

Nevertheless, Melvyn Weiss, a lead attorney involved in the IPO lawsuit, said late Tuesday that the tapes could have contained valuable information.

“All you need is one good document to blow the whole thing wide open,” he said. The class-action suit alleges that CSFB and other major Wall Street firms rigged the IPO market during the late 1990s.

Some of the information on the tapes may be recoverable, but it could be several weeks before it is known if that is possible.

The incident occurred when CSFB’s computer department sought to “cut costs” by implementing a “new schedule for recycling backup tapes,” the letter said. The system was in effect for about three weeks when CSFB’s legal department learned on Feb. 5 that “substantive data” may have been taped over.