Quattrone Challenges NASD's Securities Industry Ban

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

13 July 2005

Former Credit Suisse First Boston high-flyer, Frank Quattrone has argued in an SEC administrative appeal that the National Association of Securities Dealers (NASD) acted illegally when it imposed a lifetime securities industry ban on him for failing to cooperate with its investigation into IPO 'spinning'.

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".

The NASD additionally stated, in the course of the SEC appeal, that Quattrone's assertion "that NASD is a state actor that must recognize his claimed Fifth Amendment privilege against self-incrimination has no basis in law or the facts of this case".

However, a brief filed by Quattrone's legal team argues that:

"NASD's assertion that it is not bound by the constitution asks the commission to close its eyes to three decades of major cumulative changes that have made the NASD an exclusive, federally mandated disciplinary and licensing body."

In a parallel appeal heard by a federal appeals court this week, the former CSFB official additionally argued that his obstruction of justice conviction should be overturned in light of the recent reversal of the Andersen verdict by the US Supreme Court.

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