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Ex-Credit Suisse banker in court

Quattrone was charged in April this year Keystone Archive

The former Credit Suisse First Boston (CSFB) banker, Frank Quattrone, has gone on trial in New York charged with trying to obstruct a United States legal probe.

This content was published on September 29, 2003 - 18:21

Quattrone is accused of telling his staff to destroy documents amid a regulatory investigation into the handling of 1990s stock offerings.

The case is one of the biggest criminal trials in recent history involving a former Wall Street powerbroker.

Quattrone’s case also comes amid a wave of regulatory and courtroom attacks on the excesses of the recent tech bubble.

And for Switzerland’s second-biggest bank, which parted ways with Quattrone at the beginning of the year, the trial is unwelcome publicity.

"The case does not help the bank. It has tried very hard to clean up its act in the last few years. The Quattrone case is not the only problem the bank has faced in the past," Reto Pieth, a Swiss journalist based in the United States, told swissinfo.

"This trial is not a good thing for Credit Suisse because it brings back all the bad memories of all the bank's wrongdoings," he added.

At one stage, Quattrone helped make CSFB one of the world’s leading dealmakers on technology stocks and IPOs, or initial public offerings.

IPOs were the fuel that helped push stock markets to unprecedented heights. Shortly after being launched, many surged in value only to collapse later.

$100 million man

Quattrone, who once reportedly earned an annual salary of $100 million (SFr135 million) at CSFB, faces a maximum sentence of up to 25 years in jail and fines totaling $750,000 if found guilty of obstructing a government investigation.

The case hinges on a single email, drafted by someone else, which Quattrone forwarded to his entire department advising staff to “clean up those files”.

The message was sent just days after Quattrone had been told that the US Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) was investigating the bank’s IPO practices.

The bank was accused of inflating commissions from about 100 hedge funds in exchange for taking charge of new stock offerings.

Even though the bank never admitted any wrongdoing, it paid $100 million in January 2002 to settle the case.

"The bank gave Quattrone too much leeway and because he made so much money it had no incentive to supervise properly and that is what the bank has to be blamed for most," Pieth said.

Earlier this year CSFB paid a $200 million fine to the SEC following charges that it issued biased stock research.

Mixed chances

Legal experts remain divided on Quattrone’s chances.

Although the case against the former banker is largely based on a single email, he will have to convince the jury that it was not linked to the SEC probe.

And with public resentment against the excesses of Wall Street at an all-time high, Quattrone’s lawyers will need to persuade the jury that the banker should not be held responsible for the crimes of the entire industry.

swissinfo, Jacob Greber in Zurich

CSFB

Earlier this year CSFB, while admitting no wrongdoing, agreed a $200 million settlement with the SEC over charges of issuing biased stock research.

The bank also agreed to introduce so-called "chinese walls" between research analysts and bankers working on underwriting deals.

Quattrone resigned from CSFB in March. He received no immediate compensation or severance package in connection with his exit.

CSFB suspended him in February for questionable conduct related to an earlier investigation of an IPO.

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