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It’s a time-honored defense tactic: Shift the blame. That’s what Frank Quattrone, the former star banker at Credit Suisse First Boston Corporation, tried to do in his recent trial for witness tampering and obstruction of justice. Prosecutors claimed that the banker sent two e-mails to his staff in December 2000 that were coded messages to destroy documents before they could be turned over for a federal grand jury subpoena. But Quattrone argued that the e-mails only directed his employees to follow CSFB’s policy on document retention and destruction. He maintained that if he was supposed to give different instructions to his staff, he should have been told to do so by the bank’s in-house attorneys. By throwing a spotlight on CSFB’s lawyers, Quattrone ensured that David Brodsky, the bank’s former general counsel, would spend a lot of time on the witness stand. Now a partner in the New York office of Latham & Watkins, Brodsky testified that he told Quattrone about the subpoena, and recommended that the banker hire his own lawyer. The ex-GC said he didn’t discuss the company’s document policy with Quattrone. But Brodsky added that Quattrone’s e-mails caused CSFB’s law department to issue an alert two days later against document destruction. In the end, both sides’ arguments came to naught. Jurors couldn’t agree on a verdict, resulting in a mistrial at the end of October. At press time the government hadn’t announced whether it would retry Quattrone. But the question raised by his case remains unanswered. Who bore ultimate responsibility for interpreting CSFB’s document policy � Quattrone, or the bank’s lawyers? To put the issue another way: How far do in-house attorneys have to go to ensure that employees understand company guidelines? The following account is based on trial statements from prosecutors, Brodsky, Quattrone, and the banker’s defense attorney. Stop Everything, It’s A Subpoena CSFB’s document policy states that upon completion of an initial public offering, employees should preserve key documents in a file and destroy notes or other superfluous documents. But when there is a civil or criminal subpoena, document destruction is suspended. In 2000, regulators and prosecutors launched several probes into CSFB’s alleged practice of “spinning” � allocating shares in hot initial public offerings to clients who paid inflated commissions on other trades. The most worrisome inquiry, Brodsky testified, was an investigation by the U.S. attorney’s office in Manhattan. Prosecutors were wielding a grand jury subpoena for documents that would show how CSFB allocated IPO shares. In November 2000, Brodsky met with prosecutors in an attempt to get them to drop or limit their investigation, but was rebuffed. The GC then turned to his next concern, Quattrone. As head of CSFB’s Global Technology Group, the banker ran IPOs in tech stocks. In an exchange of e-mails on December 3, 2000, Brodsky told Quattrone about the grand jury subpoena, warning, “This should absolutely not be passed to anyone else.” On December 4, Quattrone received a copy of an e-mail from one of his staff, according to prosecutors. The employee, Richard Char, proposed that a memo be sent to employees of the Global Technology Group reminding them of CSFB’s document policy. Char’s e-mail noted the potential for civil securities litigation in the wake of probes by the Securities and Exchange Commission and NASD, and closed by saying: “Today it’s administrative housekeeping � in January it could be improper destruction of evidence.” Later that day, according to the government, Quattrone sent a reply to Char: “You shouldn’t make jokes like that on e-mail.” Brodsky testified that on the next day, December 5, he told Quattrone in a phone conversation that the banker should get his own lawyer. The GC added that The Wall Street Journal was preparing an article on the IPO investigation. Prosecutors said that hours after this conversation, Quattrone re-sent Char’s original note about CSFB’s document policy to his employees. But Quattrone made his own addition: “Having been a key witness in a securities litigation case . . . I strongly recommend you follow this advice.” Two days later, on December 7, CSFB’s in-house lawyers sent an alert to employees: The bank’s document policy was suspended, and they should preserve all documents. The fact that this alert came two days after Quattrone’s second e-mail was a key piece of evidence in the banker’s favor, according to defense attorney John Keker of San Francisco’s Keker & Van Nest. But on cross-examination, Brodsky said the December 7 alert was issued precisely because Quattrone’s e-mails ran counter to the bank’s document policy and the grand jury subpoena. Keker pressed Brodsky over whether any employees had actually destroyed documents in the wake of Quattrone’s e-mails. “Did you conduct any investigation [into document destruction]?” Keker asked. The ex-GC said he assigned two deputies to look into the matter, but they never came back with an answer: “I don’t know what, if anything, they did.” Doing What The Lawyers Say While the government and the defense largely agreed about the sequence of events, they offered sharply different interpretations of what Quattrone meant by his e-mails on December 4 and 5. Assistant U.S. attorney Steven Peiken argued that in both messages, Quattrone was implicitly telling his employees to destroy documents. The prosecutor added that Quattrone knew such a directive was in violation of both the grand jury subpoena and CSFB’s document policy. The banker was savvy enough to know that a subpoena made the policy’s ban on document destruction “self-executing,” Peiken argued. Quattrone maintained that his e-mails didn’t contain any hidden messages; they only directed employees to follow CSFB’s document policy. Further, he believed that the federal grand jury probe covered other parts of the bank outside of his supervision. Quattrone thought that if the subpoena directly affected him � and if the document policy was suspended � he would have been told so by CSFB’s in-house attorneys. “The lawyers would get requests, they would figure out what to do, and they would tell us what to do,” Quattrone testified.

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