updated 3/24/2006 8:07:12 PM ET 2006-03-25T01:07:12

Federal regulators overturned a lifetime ban from the securities industry against former star technology banker Frank Quattrone on Friday, four days after his conviction on charges of obstructing justice was thrown out by a federal appeals court.

The five members of the Securities and Exchange Commission took the action unanimously, ruling that the brokerage industry’s self-policing organization violated its own rules when it banned Quattrone in November 2004 for allegedly failing to cooperate in an investigation of his activities.

Quattrone had appealed to the SEC the ban by the National Association of Securities Dealers, saying that it unfairly singled him out for harsher treatment than that given people in similar cases. Quattrone contended that being compelled to testify in the NASD’s investigation while criminal charges were pending against him would violate his Fifth Amendment right against self-incrimination.

“Given the particular set of facts raised by Quattrone, we find that NASD was not entitled to conclude that he had not raised a genuine issue of material fact,” the SEC said in its ruling. “NASD did not act in accordance with its rules.”

The NASD action went beyond the 10-year ban stemming by law from Quattrone’s criminal conviction, which brought him a sentence of 1½ years in prison and a $90,000 fine. Quattrone was convicted in May 2004 — in his second trial — of hindering a federal probe into how his Wall Street investment bank, Credit Suisse First Boston, had allocated shares of initial public offerings of stock during the late-1990s Internet boom.

In January 2004, an NASD hearing panel suspended Quattrone from the industry for only a year and fined him $30,000. That decision was later overruled, however, by the organization’s National Adjudicatory Council, which imposed the permanent ban.

The SEC action marked the second victory in a week for Quattrone, the king dealmaker of the Internet stock boom who once made $120 million in a single year. He may face a third obstruction-of-justice trial after the 2nd U.S. Circuit Court of Appeals in Manhattan tossed out his conviction on Monday after concluding that the jury was improperly instructed on how to interpret the law.

The appeals court granted Quattrone a new trial and ordered a change in the judge and rules governing a retrial. The government is weighing whether to retry the case.

“The SEC decision corrects the NASD’s gross injustice in barring Mr. Quattrone from the securities industry for life for nothing more than exercising his constitutional rights,” one of Quattrone’s attorneys, Jerome B. Falk, said in a statement. “The decision lifting the lifetime bar is particularly appropriate given that the 2nd Circuit Court of Appeals threw out Mr. Quattrone’s conviction earlier this week.”

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