), Quattrone's former employer, testified that he called Quattrone on December 5, 2000, to advise him to get a lawyer who could represent him in connection with federal investigations into CSFB's banking activities. A short time later, Quattrone sent an e-mail to employees in his high-tech investment-banking unit urging them to clean up their files, according to evidence introduced at the trial.
This testimony goes to the essence of the government's case against Quattrone. Federal prosecutors allege that he encouraged employees to purge documents so as to hinder an investigation into possible illegal allocations of shares in initial public offerings from 1999 to mid-2000. At the time, not only the Justice Dept., but also the Securities & Exchange Commission and the National Association of Securities Dealers were probing the firm's activities (see BW, 10/3/03, "Inside Frank Quattrone's Money Machine" and "Silicon Valley's Blurry Ethical Vision").
LEGAL EAGLE? The challenge for Quattrone's attorneys now is to convince the jury that Quattrone didn't believe the investigations were directed at his banking group and that his e-mail wasn't in response to the probes and Brodsky's phone call. In Quattrone's e-mail, he added his encouragement to a message that had been sent out the previous evening by one of his subordinates, Richard Char.
"Frank didn't give it much thought. If Char thought it was the right thing to do, [Frank] thought it was O.K.," Robert Chlopak, who handles public relations for Quattrone, said after Brodsky's Oct. 3 testimony. Chlopak said Char had been an attorney for a decade before he became an investment banker, so Quattrone respected his opinion on legal matters.
Quattrone's defense seems to be swimming against a strong current. For most of the Friday sesson that ended the trial's first week, the prosecution showed e-mail after e-mail that Brodsky and others at CSFB had sent Quattrone over a period of five months informing him of the escalating seriousness of the investigations. While the defense argues that the probes were narrowly focused on two IPOs and on allocations of shares handled by other business units, the e-mail seem to contradict that. The messages paint a picture of broad inquiries into the company's process of underwriting stock offerings, in which Quattrone and his staff played a key role.
"CHEAP SHOT"? Frustration seems to be growing for the defense team. It protested after Judge Richard Owen allowed prosecutors to show documents revealing that Quattrone was paid more than $150 million in cash and stock during 1999 and 2000, plus 50% of the shares he had been granted as part of his agreement to work for CSFB. After the jury left for the day, Quattrone's attorney, John Keker, said to a crowd of reporters, "I call it a ploy and a cheap shot."
Keker may have gotten the last word with the press, but when the trial resumes on Oct. 7, he'll be on the spot to shoot down what's shaping up as a mighty strong case against his client. Hamm, a senior writer for BusinessWeek, is covering the trial