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Tech's star banker guilty: Quattrone convicted of obstruction in retrial

By Brooke A. Masters
The Washington Post

KATHY WILLENS / AP Frank Quattrone is followed by his lawyer, John Keker, after his conviction yesterday. One juror said of the high-tech industry's well-known banker: 'You don't get to the top without being aware of a lot of things.'

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NEW YORK — Frank Quattrone, who helped drive the 1990s stock boom as one of Wall Street's most prominent bankers, was convicted yesterday of obstructing two federal investigations into the way his employer handed out hot new stocks.

Quattrone's conviction was a victory for federal prosecutors, who decided to press the case a second time after his first trial ended in a hung jury more than five months ago.

The six men and six women on the second jury deliberated less than eight hours over two days before finding the former banker guilty of three charges of interfering with a grand jury and a Securities and Exchange Commission investigation into the way Credit Suisse First Boston (CSFB), his former firm, handled the allocation of shares in initial public stock offerings (IPOs).

Quattrone, 48, was one of the major architects of the technology bubble, helping to shepherd hundreds of high-tech IPOs in the 1990s.

He supervised CSFB's technology bankers who brought companies to market and the analysts who wrote reports on them for investors.

Quattrone at a glance Age: 48; born in Philadelphia Education: Undergraduate degree in economics, 1977, University of Pennsylvania's Wharton School; MBA , 1981, Stanford University Career: Worked briefly for Morgan Stanley before starting his MBA. Returned to Morgan Stanley, then joined Deutsche Bank's technology group as managing director in 1996. Moved two years later to Credit Suisse First Boston to head its technology group in Palo Alto, Calif. Source: The Associated Press

CSFB has paid $300 million to settle investigations into biased research and the way it handed out desirable IPO shares.

Quattrone's case turned on a two-line e-mail that he sent Dec. 5, 2000, which "strongly advised" nearly 400 subordinates to follow an earlier memo telling them to "clean up" their IPO files.

Prosecutors argued that Quattrone was trying to impede the investigation because he had been told just hours before that he needed a personal lawyer and might be called as a witness by the grand jury.

But the Los Altos, Calif., resident testified he believed the IPO investigation was aimed at a different part of the bank and that he was not thinking of it when he sent the e-mail.

After the verdict, jurors said they did not buy that excuse from Quattrone, who earned $120 million in 2000 as head of CSFB's technology group.

"Frank Quattrone was at the top. You don't get to the top without being aware of a lot of things," said Sheldon Silver, a receptionist and former actor.

"This man was used to handling five different things at once. It just seemed like too much of a coincidence to us."

Quattrone sat stone-faced as the verdict was read. Under federal sentencing guidelines he faces 10 to 16 months in prison when he is sentenced Sept. 8.

The guidelines also allow U.S. District Judge Richard Owen to add up to five more months if he rules that Quattrone lied on the stand. That issue could arise because Quattrone was convicted after testifying in his own defense.

The former banker still faces civil charges from the industry regulator NASD, formerly known the National Association of Securities Dealers.

Quattrone's mother and sister sat silently during the verdict but burst into tears when he came over and gave them a hug at the end of the proceedings.

Outside the Manhattan courthouse, Quattrone, who remains free on bail until sentencing, declined to comment.

But his attorney John Keker said, "We are obviously grossly disappointed. I feel like we failed Frank. He is innocent."

Keker vowed an appeal, alluding to a series of evidentiary rulings that went against the Quattrone team.

"There was an awful lot of evidence that the jury didn't hear," Keker said.

Unlike most criminal defendants, Quattrone took the stand in his own defense at both trials. Jurors in the first case said they thought Quattrone contradicted himself on the crucial question of whether he was involved in IPO allocations.

This time, the banker said upfront that he sometimes provided "input" into the way CSFB doled out hot shares, and he kept his cool throughout his cross-examination by Assistant U.S. Attorney David Anders.

"We thought he came across as very confident. He was very self-assured," said juror Susan Poryles, a human-resources consultant.

"I started out thinking he was just too smart to do something wrong," she said.

Witnesses told the jury that the first "clean up" memo was not Quattrone's idea, and Quattrone testified that he was not thinking of the grand jury when he fired off his own e-mail endorsing the plan to cull IPO files.

But prosecutors Anders and Steven Peikin showed that the banker could have stopped the initial memo and waited 24 hours before sending his own e-mail endorsing it.

"The crux of the case was all around Frank Quattrone's intent and state of mind when he sent that e-mail," said juror Jonathan Miller, a computer-technology consultant.

He said the jury started out with two-thirds in favor of conviction and moved steadily toward unanimity.

The steady drumbeat of publicity about corporate malfeasance did not enter into jury discussions, Miller said.

"The jury did not intend on sending any kind of message to any constituency," he said. "We were charged to determine the facts in the case ... and that's what we did."

Washington Post writer Ben White and staff researcher Richard Drezen contributed to this report.

Copyright © 2004 The Seattle Times Company

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