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Frank Quattrone told a jury Thursday that he complied thoroughly with Credit Suisse First Boston’s document retention policy and never considered himself or his Global Technology Group the target of a federal grand jury investigation. Speaking softly but clearly in response to questions from his lawyer, John Keker, Quattrone insisted that an e-mail he endorsed concerning the destruction of documents regarding initial public offerings was simply a directive to follow the policy, and not a heavy-handed hint to impede an investigation into the allegedly improper allocation of hot IPO shares and inflated commissions. Quattrone was taking the calculated risk of testifying on his own behalf against charges that he obstructed justice and tampered with witnesses through e-mails in December 2000. Appearing relaxed, and making a point of looking directly at the jury when answering questions, Quattrone said he had no motive to urge document destruction because he had nothing to fear from either the grand jury probe or parallel investigations by the National Association of Securities Dealers and the Securities and Exchange Commission. He used his testimony to advance the two central themes of his defense: that the federal probe into IPO allocations concerned other parts of the bank outside of his supervision, and that he always followed the advice of bank lawyers to the letter. It was Credit Suisse First Boston General Counsel David Brodsky and other attorneys with the bank’s legal and compliance division who were responsible for ensuring adherence to the bank’s document retention policy, he said. The policy mandated the destruction of all non-essential documents once an initial public offering was completed, except where the firm had been issued a subpoena or a request for documents in a civil or criminal case, in which instance all documents were to be preserved. It was the lawyers, he said, who were in charge of deciding, and then notifying employees, that the normal practice of “file cleaning” should be halted. “The lawyers would get requests, they would figure out what to do and they would tell us what to do,” he said. During an e-mail exchange with Brodsky on Dec. 3, 2000, Quattrone had learned about the existence of the federal grand jury subpoena, he said. The next day, Dec. 4, he received a copy of an e-mail from Richard Char, who was proposing a memo be sent to employees of the Global Technology Group reminding them of the firm’s document retention policy in light of the potential for civil securities litigation. Char ended his e-mail by saying that what might be considered “administrative housekeeping” today, could soon be considered illegal destruction of evidence. Quattrone’s answer to that proposal was to warn Char not to make “jokes” like that on e-mail. “I think Mr. Char was using some inappropriate language and that the e-mail is a medium that is around forever and can come back to bite,” Quattrone said Thursday. He then prompted a burst of laughter from the packed courtroom by adding, “I guess I was right about that.” On Dec. 5, Char’s proposed memo was sent back to Quattrone, who endorsed it by adding that “Having been a key witness in a securities litigation case . . . I strongly recommend you follow this advice.” This statement, according to prosecutors Steven Peikin and David Anders of the Southern District U.S. Attorney’s Office, was a clear signal from the boss that employees should clear out their files. Quattrone explained that the litigation he was referring to was a suit in South Texas accusing Quattrone’s former employer, Morgan Stanley, of failing to do due diligence when it assembled a prospectus for a hard drive storage company. Morgan Stanley prevailed in the suit, Quattrone said, in part because it had preserved all key documents to support its claim of due diligence. But Quattrone said he was struck by how the “plaintiffs’ lawyer” in the Texas litigation would “misinterpret and twist handwritten notes.” He said he learned from the experience to “keep documents that show you did due diligence,” and “follow the lawyers to make sure you follow the document retention policy.” MEMO ENDORSEMENT The problem for Quattrone, according to the prosecution, is that the Dec. 5 endorsement of the Char memo came after a phone conversation between Brodsky and Quattrone. In that call, Brodsky told Quattrone that The Wall Street Journal was preparing an article on the federal investigation — and then told him to get his own lawyer because the firm could not represent him. But Keker, of San Francisco’s Keker & Van Nest, stressed that Quattrone had actually begun writing his “securities litigation” endorsement the day before, on Dec. 4, before Brodsky told him the bad news by phone. And Keker had his client counter that information further by emphasizing that the general counsel never told Quattrone the document retention policy was suspended. And, Quattrone said, the general counsel never told him that the grand jury subpoena was so broad as to encompass elements of the IPO process beyond the “small” portion involved in the actual allocation of shares, a portion Quattrone said repeatedly he had nothing to do with. Peikin and Anders, however, insist that Quattrone was savvy enough to know that the policy was suspended, and that mere notice of a federal grand jury subpoena made the policy “self-executing.” But Quattrone maintained his position when asked by Keker if he had, at any point, ignored company lawyers. “No,” he said. “I’ve always done what the lawyers told me to do.” The trial is expected to end sometime this week.

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