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Defense attorney John Keker used a key government witness Tuesday in an attempt to show that Frank Quattrone had no reason to believe that Credit Suisse First Boston’s document destruction policy had been suspended. Cross-examining former bank General Counsel David Brodsky, Keker focused repeatedly on the decision of in-house lawyers to issue an alert on Dec. 7, 2000, telling employees to preserve all documents. The alert, Keker says, was tardy because it came two days after Quattrone endorsed an e-mail instructing employees to clean out their files. But Brodsky, who calmly answered questions for more than four hours Tuesday, said the very reason the Dec. 7 policy suspension warning was issued was out of alarm that two e-mails involving Quattrone ran counter to both bank policy and the demands of a federal grand jury subpoena. The cross-examination came during the fifth day of Quattrone’s trial for obstruction of justice and witness tampering in connection with a federal probe into abuse in the allocation of shares in initial public offerings. On Friday, Brodsky testified that he had told Quattrone on Dec. 3, 2002, that the bank received a grand jury subpoena for documents relating to the allocation of shares. The government contends the disclosure of the subpoena to Quattrone effectively put him on notice that all documents were to be preserved. But for Keker, it is a key piece of evidence in Quattrone’s favor that in-house lawyers waited until Dec. 7 to issue a formal notice to employees warning that the bank’s usual practice of clearing files had been suspended. On Dec. 4, a bank employee sent a message to his colleagues saying that looming securities litigation over the collapse of technology stocks made it important for bank employees to abide by the document retention or document “destruction” policy. After reading the message, which stated, “Today, it’s Administrative Housekeeping. In January, it could be improper destruction of evidence,” Quattrone answered, “You shouldn’t make jokes like that on e-mail.” Then, on Dec. 5, Quattrone, in answer to a revised e-mail from the same employee recommending file cleaning, essentially endorsed that message by adding, “Having been a key witness in a securities litigation case … I strongly recommend you follow this advice.” NARROWING THE ISSUES Keker also used his methodical questioning of Brodsky to attempt to portray Quattrone as a minor player in the IPO allocation process, and as someone who had no reason to even hint that documents should be destroyed. The government subpoena was a search for documents to build a case that the bank abused the IPO by requiring kickbacks from favored clients who received allocations of shares in hot technology stocks. Keker elicited from Brodsky that the allocation process was just one “small piece” of the overall IPO process, meaning that many of the documents sought by the government would have been the responsibility of other divisions within the bank to produce. The defense lawyer also made a point of emphasizing testimony from Brodsky to the effect that Quattrone’s Global Technology Group in Palo Alto, Calif., was responsible for obtaining the contracts for IPOs, but the actual work of setting a price and selling the shares was done by other divisions. But Brodsky was careful to note that the “line” separating the responsibilities of the Global Technology Group and other divisions handling IPOs was not very clear. The government eventually abandoned its probe of the bank, and Keker pressed Brodsky over whether any employees had actually destroyed documents in the wake of the two e-mails, or even whether any meaningful investigation was conducted into the possibility of document destruction. “Did you conduct any investigation” into document destruction? Keker asked. Brodsky responded that he had assigned two deputies to look into the matter, but they never came back to him with an answer. “I don’t know what, if anything, they did,” he said. Following Brodsky, bank stock analyst Michael Ounjian testified that, in the wake of the Dec. 4 and Dec. 5 e-mails, he instructed junior analysts to “get rid of” drafts and hard copies for some initial offerings. “It’s important to make sure we cover ourselves on this stuff in case something does happen,” Ounjian said in an e-mail to the analysts. But when Ounjian was asked on cross-examination whether any one had told him not to comply with the document retention policy before Dec. 6, he said no. EVIDENCE REQUEST Once the jury was dismissed for the day, Keker and Southern District Judge Richard Owen sparred over Keker’s desire to introduce evidence that the government’s investigation of the bank did not focus on Quattrone. Owen had already ruled in the case that the jury would not learn that the bank reached a $100 million civil settlement with the government and was never charged criminally, but Keker continued to argue that the state of the investigation was relevant. “Their IPO investigation was over and done with and he wasn’t involved,” said Keker of San Francisco’s Keker & Van Nest. But Judge Owen said the focus of the trial should be on Quattrone’s intent and not on the status of the government probe after the critical events of the first week of December 2000. “If he knew about the investigations, he should not have sent that e-mail,” Owen said. The Associated Press contributed to this report.

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