Quattrone Defense Lawyers Rest Case

Lawyers for Frank Quattrone rested their case Wednesday after the former banking star endured a grueling six-hour cross-examination focusing on his involvement in his bank’s allocation of hot new stocks.

U.S. District Judge Richard Owen said jurors in the retrial would have today off, hear closing arguments Friday morning and begin deliberating the case Friday afternoon.

Quattrone is charged with obstruction of justice and witness tampering for sending a Dec. 5, 2000, e-mail urging employees at Credit Suisse First Boston to “clean up” their files.

At the time the government was looking into CSFB’s allocation process for initial public offerings of stock -- specifically, whether some clients had paid kickbacks to get a piece of hot new issues.

On Wednesday, prosecutors sought to show that Quattrone was intimately involved in the allocation of stocks that CSFB took public -- and therefore was trying to hinder the probe when he sent the e-mail.

Assistant U.S. Atty. David Anders presented Quattrone a series of e-mails showing that people from other parts of his bank, including high-ranking brokers, had asked his advice on who should get stock shares.

In one case, Quattrone was asked for his thoughts on how many shares of AvantGo, a company CSFB was taking public, should be given to the chief executive of another company, Research in Motion Ltd.

“We can’t do something where it looks like we are spinning,” Quattrone answered, referring to a frowned-upon process for wooing investment banking business. “Would like to be on generous side of what can be defended.”

In another e-mail, Quattrone jumped into a discussion over whether a CSFB client called Integral Partners should receive special treatment in an IPO.

“Isn’t it fair to say that this e-mail shows you and Mr. Brady were involved in the IPO allocation process?” Anders asked, referring to another high-ranking CSFB banker.

“Yes,” Quattrone answered.

But the former banker insists -- and repeated Wednesday -- that he never made any final decisions on allocations and that he was not thinking about allocations when he sent the e-mail regarding documents to his investment bankers.

“What I thought the investigation was about was hedge funds paying excessively high commissions to get IPO allocations,” Quattrone said under a second round of questioning from his own lawyer.

Anders also suggested on cross-examination that Quattrone, acting on behalf of CSFB, struck a deal in 2000 -- undisclosed to investors or regulators -- to collect $2 million in fees from Research in Motion executives.

“You know when there’s secret, undisclosed compensation, that’s a violation of federal securities laws, right?” Anders asked.

“It could be, yes,” Quattrone answered.

Quattrone’s lawyer suggested the money was the balance of what Research in Motion owed the bank for a secondary public offering of some of its shares.

Quattrone was tried on the same charges -- two counts of obstruction and one count of witness tampering -- last fall, but the case ended in a mistrial with jurors deadlocked.