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The Honolulu Advertiser
Posted on: Saturday, October 25, 2003

Jury deadlocks in banker's trial

By Brooke A. Masters and Carrie Johnson
Washington Post

NEW YORK — The trial of the only major Wall Street figure to be charged with a crime in connection with the 1990s stock bubble ended in a mistrial yesterday when the jury deadlocked after nearly five days of deliberations.

A new trial for former Credit Suisse First Boston banker Frank Quattrone, left, could start as soon as next month.

Associated Press

Frank Quattrone, a former Credit Suisse First Boston investment banker, was charged with two counts of obstruction of justice and one count of witness tampering in a case that turned on what he was thinking when he sent a two-line e-mail to several hundred subordinates in December 2000, endorsing a plan to "clean up those files."

After receiving a note from the jurors saying they were "unable to reach a verdict on any of the three counts," U.S. District Judge Richard Owen said it was "appropriate to declare a mistrial at this point."

Two jurors said the closest the panel came to a verdict was an 8-to-3 vote for conviction on at least one count.

The announcement ended — at least temporarily — a high-stakes battle that pitted some of the nation's top defense lawyers against the U.S. attorney in Manhattan, long considered the leading enforcer against corporate crime. It also indicated that it remains difficult for prosecutors to prove criminal intent even in an era of corporate scandals and public anger at Wall Street, legal analysts said.

Quattrone, 48, could face a second trial as early as next month, The Associated Press reported.

In the late 1990s, Quattrone, who made $120 million in 2000, was a powerful Silicon Valley figure, helping to mastermind some of the best know tech-stock offerings, including Cisco Systems, Netscape and Amazon.com. It was an investigation into how shares in hot initial public offerings were handed out that led to the charges against him.

Prosecutors alleged that Quattrone sent the e-mail because he had learned two days earlier that the firm had received a grand jury subpoena seeking information about the way CSFB doled out shares in those IPOs. But Quattrone contended that he was simply following the bank's document-retention policy and thought the grand jury investigation was focused on another part of CSFB.

Quattrone is the most important Wall Street figure in a decade to face criminal charges. He was one of the first bankers to recognize Silicon Valley's financial potential. But he was also a major architect of the technology bubble, and dozens of his IPOs are now worth only pennies on the dollar.

"If Enron and WorldCom epitomize general corporate corruption, the Quattrone controversy epitomizes the corruption on the dot-com side," said University of Texas law professor Henry Hu. "One of the concerns I have now is that people on Wall Street will take this mistrial as a signal that nothing really bad can happen to you."