Securities industry regulators have dropped all charges against former star technology banker Frank Quattrone over how his investment bank allocated shares of hot IPOs during the late-1990s Internet boom.
The National Association of Securities Dealers, which is the brokerage industry’s self-policing organization, withdrew the charges for procedural reasons. The ruling Wednesday by an NASD hearing officer was the third in a trio of legal victories for Quattrone.
In March, the Securities and Exchange Commission overturned a lifetime ban from the industry against Quattrone, and his conviction on charges of obstructing justice was thrown out by a federal appeals court.
He faces a third trial on those charges if prosecutors decide to pursue one, rather than to appeal the overturning of his conviction. Quattrone’s lawyers indicated recently that they were engaged in talks with the government on a possible settlement that would spare him a trial.
Quattrone was a king dealmaker of the Internet stock boom who made a fortune helping bring some of the hottest new Internet companies to the market as head of the technology division at Wall Street investment bank Credit Suisse First Boston, which has since changed its name to Credit Suisse (USA) Inc. He was convicted in May 2004 on federal charges of obstruction of justice, after his first trial ended in a hung jury in 2003. The 2nd U.S. Circuit Court of Appeals overturned the conviction in March, granting Quattrone a third trial.
Quattrone “can now focus on resolving his obstruction case,” said Tim Coleman, an attorney at Dewey Ballantine and former federal prosecutor who is not involved in the case. “This may increase the pressure on the government to fight for a conviction to avoid the perception that Quattrone is getting off scott-free.”
Although the regulators have dropped their case, Quattrone still could lose his securities-industry license if he were convicted in a new trial, Coleman noted.
The NASD in March 2003 had charged Quattrone with “spinning” — giving corporate executive clients the chance to buy into coveted initial public offerings as a way to win their companies’ investment-banking business — from July 1998 to December 2001.
The hearing officer on Wednesday granted a motion by the organization’s enforcement department to withdraw the charges because many of the individuals it wished to call as witnesses are no longer securities brokers under the NASD’s jurisdiction.
Quattrone had asserted that he was not responsible for making or supervising IPO allocations at CSFB and that NASD rules did not prohibit the conduct in question.
“Throughout my 23-year career, I have upheld high standards of integrity and professional conduct in my work and complied with the rules and regulations,” Quattrone said in a statement issued Thursday. “I am pleased that justice has been done, and truly grateful for the support of my family, friends and clients who stood by me during these challenges, as well as for the expert work of my legal team.”