It emerged last week that the National Association of Securities Dealers has dropped all charges against Frank Quattrone, raising the possibility of a securities industry comeback for the former CSFB star broker.
The decision, announced by the NASD Department of Enforcement last Wednesday, pertained to allegations related to IPO allocations and research supervisory issues at Credit Suisse First Boston.
The dispute stemmed from the former investment banker's forwarding of an e-mail urging CSFB employees to 'clean up' their files pending a federal investigation of the allocation of shares in popular initial public offerings.
Mr Quattrone refused to cooperate with an NASD inquiry into the matter, invoking his Fifth Amendment right not to incriminate himself, on the grounds that he was also facing criminal charges over his alleged actions.
The securities association responded by imposing the lifetime ban on the former star broker, arguing that by refusing to respond, Quattrone had "violated the cornerstone principle of securities industry self-regulation that associated persons must cooperate with investigations".
Commenting on last week's NASD decision, Mr Quattrone's attorney, Howard Rice partner Kenneth Hausman announced that:
“Frank Quattrone played by the rules, and the practices at issue were legal, common in the industry, and approved by CSFB’s senior management and legal counsel at the time. NASD has made the right decision, and we are pleased that Mr. Quattrone can now put these charges behind him.”
This follows a Securities and Exchange Commission decision in March to overturn a lifetime ban on working in the securities industry imposed on the former broker, and the granting of a new trial after the Second Circuit Court of Appeals panel ruled that presiding Judge Richard Owen had wrongly instructed the jury.
US District Judge Lewis A. Kaplan has been appointed to replace Judge Owen. It is not yet clear, however, whether prosecutors intend to pursue the former broker through the courts a third time.
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