CSFB’s Quattrone Resigns
Frank Quattrone, one of the most celebrated investment bankers in the 1990s who is now under criminal investigation, resigned from Credit Suisse First Boston on Tuesday.
Quattrone’s departure comes as state and federal prosecutors try to determine whether the Silicon Valley-based financier sought to obstruct government inquiries of initial public stock offerings floated during the height of the bull market.
His resignation was expected after he refused late last week to be interviewed by regulators from NASD, formerly known as the National Assn. of Securities Dealers.That violated CSFB’s policy requiring employees to cooperate with regulatory probes.
Last month, CSFB suspended Quattrone after disclosures that indicated he was aware of pending government investigations when he advised his staff in late 2000 to discard certain documents.
Two days after apparently learning of the investigations, Quattrone sent an e-mail encouraging his staff to follow another banker’s advice to “clean up” their files.
The resignation from CSFB, a unit of Credit Suisse Group, is effective immediately.
Parting ways with its embattled banker could help CSFB distance itself from the Quattrone scandal.
“The firm and Mr. Quattrone have agreed that it was in their respective best interests for Mr. Quattrone to separate from the firm at this time,” CSFB said in a statement.
Quattrone has denied wrongdoing. His spokesman said Tuesday that Quattrone expected to be exonerated.
“Frank’s position is he never intended for anyone to obstruct any inquiry,” said the spokesman, Charlie Leonard.
Quattrone did not receive a severance package and has yet to collect his bonus for 2002. Financial matters will be resolved after the investigations are concluded, Leonard said.
Quattrone is one of a handful of high-profile members of Wall Street investment firms who have come under intense scrutiny for their roles in the 1990s stock bubble.
Perhaps more than any other investment banker, Quattrone personified the heady era of instant tech-stock riches.
Thanks to close ties to Silicon Valley entrepreneurs, Quattrone, working from his office in Palo Alto, turned CSFB into an IPO powerhouse that brought scores of tech companies public.
Quattrone drew huge paychecks even by Wall Street standards and amassed enormous internal power.
Quattrone’s troubles stem from a string of e-mail messages written in late 2000 but that came to light only in the last five weeks.
The e-mails began on Dec. 3, 2000, when Quattrone received a message from David Brodsky, CSFB’s former general counsel, about the existence of two regulatory investigations and a grand jury subpoena involving IPO activities.
The next day, Richard Char, a now-former CSFB investment banker, sent an e-mail to tech investment bankers encouraging them to “clean up” documents such as valuation analyses and internal memos.
On Dec. 5, Quattrone sent a reply-to-all e-mail “strongly” advising his bankers to follow Char’s recommendation to toss out files.
On Tuesday, Quattrone said through his spokesman that CSFB lawyers kept him in the dark about the IPO investigation. He also asserted that the firm’s legal department never instructed him to preserve documents.
The Brodsky e-mail told Quattrone that the government investigations involved IPO allocations, the process by which IPO shares are doled out to investors.
The tech investment-banking group had no role in the distribution of shares, Leonard said, and Quattrone thought the probes involved only the firm’s brokerage operation.
What’s more, Leonard said, Brodsky did not order a change in the firm’s policy regarding the destruction of unneeded documents. So the e-mail to his staff was simply a reminder to follow existing company policy, Leonard said.
John Coffee, a Columbia University law professor, said he doubted that explanation.
Quattrone, Coffee maintained, “certainly recognized” that the investigations “could focus on him.”
