Updated from 12:35 a.m. EST
Credit Suisse First Boston
broke ranks with Frank Quattrone on Monday, after turning up emails that suggest he might have known the bank faced a federal investigation when he told employees to throw out documents in December 2000, according to a source.
The emails between Quattrone, arguably the most powerful investment banker of the Internet era, and the firm's then-general counsel indicate the two discussed what to do if clients asked about the probe, which focused on the bank's IPO allocation practices, a person familiar with CSFB's internal inquiry said.
CSFB said it had begun its own investigation of the powerful investment banker and would place him on administrative leave pending its completion.
Through a spokesman, Quattrone said: "I did nothing wrong. I am confident that the investigation will show that."
Quattrone already faces charges from securities regulators for allegedly directing CSFB research analysts to tailor their ratings to help attract banking business, as well as for allegedly doling out hot initial public offering shares to favorite clients.
It was reported last week that regulators are reviewing a Dec. 4, 2000, email sent by CSFB investment bankers telling employees to purge certain emails as the firm braced for investor lawsuits over fallen IPO shares. Shortly after it was sent, reports emerged that some of the bank's IPO practices had drawn the interest of securities regulators, including the NASD and the
Securities and Exchange Commission
CSFB, early last year, paid a $100 million fine to resolve that investigation, which involved allegations that the Wall Street firm took "kickbacks" from some money managers seeking to get IPO allocations.
CSFB, in its release Monday, said Quattrone was placed on leave after the company uncovered information that "raised questions" about whether he had been aware of that regulatory inquiry, when his office circulated the email about "document retention" practices at the firm. CSFB said that in light of the new information, it had "questions about whether Mr. Quattrone had acted appropriately in December 2000 when he sent that email and permitted a subordinate to send a similar email to employees."
A person familiar with CSFB's internal inquiry said that when Quattrone was first asked last week about the Dec. 4, 2000, email, he said he had not been aware of the IPO inquiry at the time the email was written. But late last week, CSFB General Counsel Gary Lynch discovered several emails indicating that Quattrone may indeed have known of the IPO allocation inquiry by the NASD and the SEC.
The source said Lynch uncovered several emails in which Quattrone and then CSFB General Counsel David Brodsky discussed that regulators were beginning to look into some of the firm's IPO practices. Those emails, written prior to the Dec. 4 email, offered Quattrone advice on what to tell corporate clients if they asked him about the regulatory inquiry.
Brodsky, now a partner in the New York office of Latham & Watkins, could not be reached for comment.
The NASD, meanwhile, recently notified Quattrone that he might face civil charges stemming from his dual role as CSFB's lead technology investment banker and the supervisor of some of the firm's tech analysts.
Last week, when news of the NASD charges was first reported, CSFB appeared ready to stand behind Quattrone. A statement released by the firm gave no indication that Quattrone would be put on administrative leave.
In its release, CSFB implied that no documents were destroyed. The firm said it "acted promptly to ensure that all relevant documents would be preserved and provided to authorities."
Quattrone's suspension is with pay.
Neither Quattrone, nor his lawyer, Kenneth Hausman, could be reached for comment.
Last week, however, Quattrone issued a statement in which he said he was cooperating with regulators and was "confident that the truth will prevail."
Quattrone, during the bull market's heyday, was among the Street's elite investment bankers and helped push CSFB to the top of the IPO rankings.