NASD Drops Quattrone Charges
Securities industry regulators have dropped all charges against former star technology banker Frank Quattrone over how his investment bank allocated shares of hot initial public offerings during the late-1990s Internet boom.
The NASD, formerly the National Assn. of Securities Dealers, withdrew the charges for procedural reasons. The ruling Wednesday by an NASD hearing officer was the third in a series of legal victories for Quattrone.
In March, the Securities and Exchange Commission overturned the NASD’s lifetime ban of Quattrone from the securities industry, and his conviction on charges of obstructing justice was thrown out by a federal appeals court.
He faces a third trial on those charges if prosecutors decide to pursue one rather than to appeal the overturning of his conviction. Quattrone’s lawyers indicated recently that they were engaged in talks with the government on a possible settlement that would spare him another trial.
Quattrone was a top dealmaker of the Internet stock boom who made a fortune helping bring some of the hottest new Internet companies to the market as head of the technology division at Wall Street investment bank Credit Suisse First Boston, now Credit Suisse (USA) Inc.
Quattrone was charged in April 2003 with urging fellow Credit Suisse bankers to destroy records after learning of a government investigation into IPO allocations. He was convicted in May 2004 on charges of obstruction of justice, after his first trial ended in a hung jury in 2003.
The U.S. 2nd Circuit Court of Appeals overturned the conviction in March, granting Quattrone a third trial.
The NASD had charged Quattrone in March 2003 with “spinning” -- giving corporate executive clients the chance to buy into coveted IPOs as a way to win their companies’ investment banking business.
The NASD on Wednesday granted a motion by the organization’s enforcement department to withdraw the charges because many of the individuals it wished to call as witnesses were no longer securities brokers and the NASD no longer had the power to compel their testimony.
It “would make no sense to move ahead with this case under current circumstances,” an NASD hearing officer wrote in granting the dismissal.
Quattrone had asserted that he was not responsible for making or supervising IPO allocations at CSFB and that NASD rules did not prohibit the conduct in question.
“Throughout my 23-year career, I have upheld high standards of integrity and professional conduct in my work and complied with the rules and regulations,” Quattrone said in a statement. “I am pleased that justice has been done.”
