NASD Fines And Suspends Quattrone

by Glen Shapiro, LawAndTax-News.com, New York

20 January 2004

The National Association of Securities Dealers (NASD) announced on Friday that former CSFB star investment banker, Frank Quattrone faces a $30,000 fine and a suspension from working in the securities industry for one year, as a result of his alleged interference in an investigation into 'hot' stock offerings.

Mr Quattrone stands accused of forwarding and endorsing an e-mail advising CSFB employees to "clean up" their files, during a federal investigation into the allocation of stocks for popular IPOs during the late 1990s.

The former broker refused to testify before the NASD, citing the then-pending criminal charges against him.

An NASD hearing panel agreed on Friday that there had been "certain mitigating circumstances" behind Mr Quattrone's failure to testify, and gave him a year to furnish the panel with further information. However, if he fails to do so, he faces a permanent ban on working in the securities industry.

Head of Enforcement at the NASD, Barry Goldsmith, has announced his intention to appeal against the hearing panel's leniency, explaining to Reuters on Friday that:

"Failure to cooperate in an NASD enforcement investigation impedes the ability of regulators to determine if investors and the markets have been harmed by improper behaviour. Anything less than a bar is inconsistent with the violations Frank Quattrone was found to have committed."

Meanwhile, a second obstruction of justice trial is set to begin March 22, after a jury was unable to decide the first time around whether the former financier broke the law by urging the "clean up".

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