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Former investment banking superstar Frank Quattrone has been found guilty of obstructing federal investigations and witness tampering.

A Manhattan jury deliberated for less than seven hours Monday before finding Quattrone had violated the law by endorsing an e-mail that called for employees in the global technology group at Credit Suisse First Boston to “clean up” their files in December 2000 while grand jury and U.S. Securities and Exchange Commission subpoenas were pending.

A somber Quattrone nodded and hugged family members after the jury had been dismissed and Southern District Judge Richard Owen had set a Sept. 8 sentencing date.

Quattrone’s attorney, John Keker of Keker & Van Nest, said after the verdict that he was disappointed and planned an appeal. Keker repeatedly clashed with Owen during the proceedings, protesting that the judge’s evidentiary rulings and his demeanor made it hard for his client to get a fair trial.

The guilty verdict came six months after Quattrone’s first trial ended in a hung jury in October. It was a significant win for prosecutors with the U.S. attorney’s securities and commodities fraud unit.

Like the March conviction of Martha Stewart for obstruction and making false statements, the guilty verdict was obtained against a high-profile, white-collar defendant accused of interfering in investigations that did not result in charges on the underlying crime.

In Quattrone’s case, prosecutors Steven R. Peikin and David Anders were able to prove to the jury that the banker intended to frustrate an ongoing investigation into the allocation of shares in initial public offerings at Credit Suisse. The investigation was into the “spinning” of initial public offering shares – the giving of shares of hot offerings to favored customers to ensure a share of their investment banking business.

At issue was the investment bank’s document retention policy, which calls for employees to rid their files of all non-essential documents once the IPO process has been completed. The policy states that the clearing out of files is to be suspended if the documents in question are being sought by subpoena.

Quattrone had received an e-mail from employee Richard Char, who cited the drop in the stock market and the possibility of securities litigation and proposed a message telling employees to follow the policy. Char said employees should clean up their files, half-joking that run-of-the-mill administrative housekeeping might one day be considered destruction of evidence.

Quattrone responded in a chastising e-mail to Char, warning him that he should not “make jokes like that on e-mail.”

On Dec. 4, Char submitted a similar message, minus the joke. Quattrone endorsed the e-mail the following day, telling employees that he had been a witness in a securities case before and was “strongly” suggesting that the employees follow the document retention policy.

Although in-house lawyers at Credit Suisse had not issued a statement to employees telling them that the document retention policy had been suspended, Anders and Peikin were able to show that Quattrone knew that the normal sweeping of files should cease.

To prove it, they once again presented former Credit Suisse general counsel David Brodsky. Brodsky, now a partner at Latham & Watkins, testified that he warned Quattrone in a series of e-mails on Dec. 3 that a federal criminal grand jury had issued a subpoena to Credit Suisse just before Quattrone had the e-mail exchange with Char.

Brodsky also said that he counseled Quattrone on Dec. 5 to hire his own attorney, not because Quattrone was a target per se, but because he might be called as a witness.

In closing arguments, Keker decried the fact that Quattrone was in the dock because a government that had turned a “22-word bureaucratic snippet” into a crime.

Quattrone, testifying in his own defense for a second time, expanded on the central theme of the defense – that he played a relatively small role in IPO allocations and had nothing to fear from the investigation because he believed the federal probe focused on another part of the bank.

He told the jury that Brodsky left him with the impression that the investigation was focused on hedge funds and high fees charged by the bank – and not on IPO allocations.

As in the first trial, Keker presented his client as a busy man who dashed off a quick response to Char without thinking of the implications of the e-mail.

But the prosecution was able to prove that Quattrone played a much greater role in deciding how IPO shares were allocated and that the investigation was far broader than he suggested. The government was also able to show that Quattrone had more than enough time to stop and think before sending the e-mail – and that he was on notice that the normal destruction of documents under the policy should stop.

Quattrone was convicted of obstruction of justice and obstruction of agency proceedings, which carry a maximum sentence of five years each, and witness tampering, which carries a maximum of 10 years. Absent an adjustment under the federal sentencing guidelines, he is most likely to receive a sentence of somewhere from 10 to 16 months in prison.

U.S. Attorney David Kelley released a statement following the verdict, saying, “The government’s ability to fully and fairly investigate allegations of wrongdoing in out financial markets depends upon the integrity of grand jury and SEC investigations.

“When we learn of efforts to obstruct or interfere with those investigations, we must, and we will, prosecute those cases to the fullest extent permitted by the law,” he said.

The Associated Press contributed to this report.

This article originally appeared in the


New York Law Journal , a publication of American Lawyer Media.

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