NEW YORK — Frank Quattrone faces a second round of tough cross-examination today as prosecutors try to build on the former Credit Suisse First Boston dealmaker’s potentially damaging admission thathe had a hand in allocating hot stock issues.<\/p>\n
In the 10th and possibly final day of testimony in the widely watched obstruction-of-justice trial, prosecutors are expected to focus on Quattrone’s decision to forward the now-infamous December 2000 e-mail urging employees ”to clean up those files.”<\/p>\n
Quattrone sent the e-mail after learning that a federal grand jury and regulators were investigating CSFB’s allocation of initial public offerings. He faces three charges of obstruction of justice and witness tampering that carry a maximum 25 years in prison.<\/p>\n
Prosecutors say Quattrone sought to destroy evidence and hamper investigations into whether CSFB took commissions or kickbacks for giving hedge funds coveted tech IPOs, some of which doubled or even tripled in value on the first day of trading during the height of the tech boom.<\/p>\n
Quattrone, 47, maintains that he and his investment banking division had no responsibility for allocating IPOs and therefore nothing to hide from investigators. He testified that he simply endorsed a subordinate’s advice to discard documents based on CSFB policy.<\/p>\n
Quattrone told the six-man, six-woman jury Friday that he thought ”there was no relevance whatsoever about what was in the investment banking files and what the (grand jury) investigation was about.”<\/p>\n
But Quattrone later appeared to contradict earlier testimony by eventually conceding under intense questioning from prosecutor Steven Peikin that, ”It is possible I looked at partial lists of allocations before final decisions were made.”<\/p>\n
Quattrone added: ”I might have taken part in some discussions. I did not make any decisions.”<\/p>\n
Lead defense attorney John Keker will be at pains to emphasize that distinction when he redirects after prosecutors are finished with the former banker. Closing arguments could come Wednesday, and the judge presiding over the case indicated that jurors could begin deliberating as early as that afternoon.<\/p>\n
”The defense needs to attempt to rehabilitate Quattrone by offering the jurors a credible explanation for the apparent discrepancy between his testimony under direct examination and his subsequent acknowledgment that he did play a role in IPO allocations,” says former federal prosecutor Jeff Eglash, now a partner at Howrey Simon in Los Angeles.<\/p>\n
During the Internet craze, it was an open secret on Wall Street that Quattrone helped win CSFB investment banking business by awarding sought-after IPO shares to top business and high-tech executives, otherwise known as ”friends of Frank.”<\/p>\n
That practice came back to haunt Quattrone Friday as Peikin showed the jury a series of e-mails showing how the IPO allocation process was sometimes handled, highlighted by a July 2000 exchange between Quattrone and Michael Dell, CEO of Dell.<\/p>\n
Dell requested 250,000 shares of Corvis, an optical networking company that CSFB was taking public. The shares were in heavy demand. Dell suggested the shares ”would certainly help” to build a relationship between his company and CSFB. Quattrone acknowledged the request and asked Dell whether he would appear as the keynote speaker at CSFB’s annual technology conference. Dell and his related investment groups ultimately got 150,000 shares of Corvis. A Dell spokesman said Monday that Dell did nothing wrong.<\/p>\n
Keker is expected to emphasize Quattrone’s limited role in IPO allocations. He may also present evidence that, on average, 5,000 people or investment funds were awarded shares in each of the more than 100 companies Quattrone brought to market at CSFB.<\/p>\n","protected":false},"excerpt":{"rendered":"
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