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Star Investment Banker Busted

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AP
A former star investment banker with Credit Suisse First Boston was arrested Wednesday on charges of obstructing investigations by a federal grand jury and the Securities and Exchange Commission and witness tampering.

The complaint alleges Frank Quattrone "unlawfully, willfully, and knowingly, corruptly influenced, obstructed and impeded ... the due administration of justice."

Quattrone was released on his own recognizance after agreeing at his initial court appearance to surrender his passport and confine his travel to within the United States. He declined comment outside court.

"Frank Quattrone is innocent. He never obstructed justice," his attorney, John W. Keker, said in a statement.

U.S. Attorney James B. Comey planned an afternoon news conference to discuss the charges.

During the dot-com boom of the late 1990s, Quattrone was one of the highest-paid figures on Wall Street, earning almost $100 million a year and wielding enormous influence at the helm of CSFB's technology unit. He presided over lucrative initial public offerings of companies such as Amazon.com and Netscape Communications Corp.

When the tech bubble burst in 2000, regulators began taking a closer look at the firm's IPO practices.

CSFB paid $100 million in late 2001 to settle accusations brought by the Securities and Exchange Commission and the National Association of Securities Dealers that it had charged inflated commissions to some clients in exchange for access to IPO shares.

At the end of 2002, CSFB agreed to pay $200 million as part of an industry-wide settlement over conflicts of interest between stock research and banking.

The NASD notified Quattrone in January that he faced separate action for his alleged involvement in research conflicts and questionable IPO practices. Soon thereafter, a series of e-mails surfaced, including a Dec. 5, 2000, message in which he urged staff to "clean up those files" - just two days after he had been told the company was being investigated.

Throughout the investigation, Quattrone has maintained that he did nothing wrong.

In sending the e-mail to staff, "he was following the document retention policies in force for his technology banking group at CSFB. He did not destroy any documents nor improperly direct others to do so," his lawyers said when he resigned from CSFB in March.

By Larry Neumeister