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CSFB Suspends Banker Quattrone

The firm finds evidence he knew of a probe when he told employees to dispose of some files.

February 04, 2003|Walter Hamilton | Times Staff Writer

NEW YORK -- Credit Suisse First Boston suspended investment banker Frank Quattrone on Monday, saying the onetime star of Silicon Valley's dot-com boom may have known that government investigations were underway when he advised employees to get rid of unneeded files.

CSFB said it placed Quattrone on administrative leave after discovering evidence Friday that "raised questions" about whether the financier knew of pending investigations when he sent an e-mail encouraging employees to follow another staffer's advice that they "clean up" their files.

The new evidence is another e-mail, dated Dec. 3, 2000, that was sent to Quattrone by David Brodsky, CSFB's former general counsel, according to a person close to the matter.

In that message, Brodsky told Quattrone that securities regulators were investigating CSFB's allocations of public stock offerings, and that the firm also had received a grand jury subpoena, the person said.

Two days later, on Dec. 5, Quattrone, the head of CSFB's technology investment banking unit, sent his staff an e-mail advising them to purge unnecessary documents that he said could be sought by plaintiffs' lawyers, the source said.

Quattrone will remain on administrative leave "pending completion of an [in-house] investigation," the firm said. He will be paid during that period, the person said.

The discovery of the Dec. 3 e-mail raises the possibility that Quattrone was seeking the destruction of potentially incriminating materials, lawyers said.

"Once a firm, and more important, an employee, are put on notice about a government investigation and then directly or overtly condone the destruction of documents ... then the potential criminal charge of obstruction of justice moves front and center," said former Securities and Exchange Commission attorney Jacob Frenkel.

Quattrone defended himself in a written statement. "I did nothing wrong," he said. "I am confident that the investigation will show that." Quattrone's lawyer did not return a phone call seeking additional comment.

Monday's action was the latest setback for the 47-year-old Quattrone, who oversaw some of the hottest stock offerings of the 1990s tech boom.

It was revealed last week that the NASD (formerly known as the National Assn. of Securities Dealers) has notified Quattrone that it might charge him with failure to supervise CSFB tech-stock analysts and with playing a role in the allocation of initial public offering shares to executives who were CSFB clients.

CSFB may have moved quickly to suspend Quattrone to dissuade regulators from bringing action against the firm, experts said.

On Wednesday, Quattrone told Gary Lynch, CSFB's general counsel, and a former SEC enforcement chief, that he did not know about the probes being conducted by the SEC and the NASD when he wrote the Dec. 5 e-mail about purging documents, the source said. Quattrone sent that message as a follow-up to an e-mail sent the day before by a member of his staff advising bankers at the firm to "clean up" their files in case of investor lawsuits against the firm.

But late Friday, an outside law firm that is investigating the matter for CSFB discovered the Dec. 3 e-mail advising Quattrone of the probes. Through his lawyer, Quattrone told CSFB executives over the weekend that he did not remember that e-mail.

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