Banker Could Be Back in Business

Times Staff Writers

If Frank Quattrone wants to wheel and deal again in Silicon Valley, he may find no shortage of clients.

Quattrone, a star investment banker during the technology industry’s boom of the ‘90s, today is expected to reach a settlement with federal prosecutors that would end their three-year attempt to tie him to abuses involving initial public stock offerings.

A deal could clear the way for Quattrone, 50, to relaunch himself in tech finance. Longtime associates say many Valley entrepreneurs and investors would be eager to work with him.

“I think he would be welcomed,” said Peter Giles, former head of the Tech Museum of Innovation in San Jose, which Quattrone helped back. “Frank was well regarded and respected in the community. He did good things all the way around.”


That included making many people rich. By Quattrone’s estimate, the stock market value of the 175 companies he helped bring public has ballooned by more than $200 billion since their initial public offerings.

The key to Quattrone’s return to the business would be a settlement without an admission of guilt. Any such admission could scare away potential customers, attorneys say.

As it stands now, “he’s not a convicted felon and he hasn’t been barred from associating with a [securities] firm,” said Ira Sorkin, a defense lawyer at Dickstein Shapiro in New York who isn’t involved in Quattrone’s case.

Quattrone, who helped manage the IPOs of such tech giants as Cisco Systems Inc. and Inc., hasn’t publicly addressed whether he would attempt to return to investment banking, a spokeswoman said.


But his fan base is broad. After he was convicted in 2004 of charges related to the government’s IPO probe -- a conviction later overturned -- hundreds of friends and business associates wrote to the presiding judge urging leniency. Supporters included Cisco Chairman John P. Morgridge and Charles Geschke, a founder of Adobe Systems Inc.

“Frank Quattrone is an exceptionally good and smart investment banker who made many friends over a long period of time,” said Joseph A. Grundfest, a professor of law and business at Stanford University.

Quattrone was charged with obstruction of justice in 2003, in a case that grew out of the government’s probe into how investment banks awarded clients shares in hot tech offerings in the 1990s. The case against Quattrone was based on his endorsement of an e-mail to staffers at his firm at the time, Credit Suisse First Boston, to “clean up” their files.

Quattrone said he wasn’t intending to interfere with the government’s investigation. The case ended in a hung jury. During a retrial in 2004, the next jury convicted Quattrone. But an appeals court threw out the conviction in March of this year, citing faulty jury instructions.


Quattrone had another victory this year, when the Securities and Exchange Commission reversed a 2004 decision by the NASD that banned him from the securities business for life. The NASD, formerly the National Assn. of Securities Dealers, acted after Quattrone refused in 2003 to answer the regulator’s questions in its own IPO probe.

Quattrone’s lawyers argued that he was simply exercising his 5th Amendment right against being compelled to testify.

The NASD dropped its probe of Quattrone in May. Now the Justice Department appears poised to do the same: A source familiar with Quattrone’s deal with the U.S. attorney’s office in New York said the two sides would enter into a “deferred-prosecution” agreement, under which the case would be put on hold so long as Quattrone didn’t break any laws.

If he complies, the case would be dropped after a set period that could be as short as a year. Quattrone wouldn’t admit to any wrongdoing, said the source, speaking on condition of anonymity because the deal hadn’t been finalized.


A spokeswoman for the U.S. attorney declined to comment. Quattrone’s attorneys didn’t return calls.