Quattrone charged
Feds will seek indictment of former CSFB banker accused of destroying evidence.
April 23, 2003: 2:48 PM EDT

NEW YORK (CNN/Money) - Frank Quattrone, a former senior executive at Credit Suisse First Boston, was charged Wednesday with obstructing justice in a federal complaint that stemmed from a probe into how CSFB allocated shares of hot stock offerings in the late 1990s.

James Comey, the U.S. Attorney for the Southern District of New York, who announced the filing of the three-count complaint, said he will seek a grand jury indictment against Quattrone "in the next couple of days."

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Federal prosecutors announce criminal charges against former Credit Suisse First Boston banker Frank Quattrone. CNNfn's Allan Chernoff reports.

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The complaint alleges that Quattrone in 2000 urged subordinates to destroy evidence sought by investigators looking into investment banking practices at CSFB.

"Frank Quattrone knowingly directed others to destroy evidence," said Gregory Jones, acting assistant director in charge of the FBI New York Field Office. Jones spoke at a New York press conference alongside Comey.

Quattrone, who helped bring technology companies public as a Credit Suisse First Boston investment banker, surrendered to the FBI earlier Wednesday. He was released on his own recognizance.

Earlier, his lawyer, John W. Keker, called the accusations wrong and unfair.

"The only way we can prove that is to try this case, which is why we will ask that the jury trial occur at the earliest possible moment," Keker said in a statement.

Regulators have been trying to show that Quattrone, who resigned in March, was part of a Wall Street culture that sought investment banking business at the expense of small investors, who lost billions of dollars during the three-year bear market.

A civil complaint from the NASD last month contended that a unit controlled by Quattrone gave access to hot IPOs to select corporate executives who could influence their employers' choice of investment bankers.

Click here to read the complaint

Allegations that banks used hot IPOs to satisfy investment banking clients have surfaced along with questions about whether Wall Street produced upbeat stock research to win banking deals.

Quattrone, 47, repeatedly has said through lawyers and spokespersons that he did nothing wrong.

The resident of Menlo Park, Calif., enjoyed spectacular success during the late 1990s craze, making CSFB one of the most lucrative underwriting operations in the history of Wall Street. One of its IPOs, VA Linux Systems Inc., set a one-day record gain by rising more than 690 percent during its December 1999 debut.

Credit Suisse First Boston Corp., the investment banking unit of Zurich-based Credit Suisse (CS: Research, Estimates), agreed last year to pay $100 million in fines for its for its role in an accepting inflated commissions from investors who bought IPOs. The firm agreed to the fines without admitting or denying any of the allegations made by regulators.

Wednesday's complaint alleges that CSFB received federal grand Jury and SEC subpoenas requiring it to produce a broad variety of documents relating to all of the IPOs it underwrote in 1999 and 2000.

Prosecutors say Quattrone knew of the subpoenas and sent an e-mail, dated Dec. 5, 2000, and was connected to an e-mail advising hundreds of CSFB bankers to "catch up on file cleanup."

The complaint includes one count of obstructing the grand jury investigation, one count of obstructing the SEC investigation, and one count of witness tampering by directing others to destroy documents.  Top of page

-- Reuters contributed to this report

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