Home > News > Business

TECH BOOM'S BANKER

Poster boy of the dot-com bubble making a comeback

By BLOOMBERG NEWS | Monday, August 18, 2008

Article
Comments ()

On a cloudless day in May, schoolchildren jam the Tech Museum of Innovation, a tangerine-colored structure in San Jose, Calif., that showcases the computer revolution. Fifth-grade girls test their technology savvy on a flat-panel display.

"Who invented the World Wide Web?" it asks, listing five names.

"Bill Gates!" the three shout in unison.

The correct answer is British computer scientist Tim Berners-Lee. Yet if the quiz were to ask who turned the Web into a byword for unprecedented wealth and, ultimately, scandal, then the answer would have to be the Tech Museum's biggest booster and chairman: Frank Quattrone.

No other investment banker did more to enrich Silicon Valley with hot initial public offerings (IPO) in the 1990s. And no one came to symbolize dot-com excesses more than Mr. Quattrone.

"He became the poster boy for the bubble," says Richard Kramlich, co-founder of venture capital firm New Enterprise Associates.

A South Philadelphia native armed with a master of business administration from Stanford University, Mr. Quattrone ran Credit Suisse First Boston Corp.'s (CSFB) technology banking group from 1998 to 2003. That year, he faced a double-barreled legal salvo. In March, the National Association of Securities Dealers (NASD) filed a complaint accusing him of giving out IPO shares to favored executives to win investment banking business. Then in April, federal prosecutors in New York charged Mr. Quattrone with obstruction of justice and two related charges after he wrote an e-mail strongly advising CSFB bankers to destroy underwriting records.

Mr. Quattrone testified that he was not guilty and had sent the e-mail in accordance with CSFB's document management policy. The jury didn't buy it. Mr. Quattrone was convicted in 2004, sentenced to 18 months in prison and barred from working in the financial markets for life. Then, in a rare turnaround two years later, a federal appeals court threw out the conviction. The court found that the trial judge had erred in his instructions by failing to tell the jury that to convict Mr. Quattrone, it must find that he intended to destroy documents relevant to a pending grand jury investigation. The NASD dropped its case the same year.

For Mr. Quattrone, who at his team's peak in 2000 handled financings and merger and acquisition assignments valued at $341 billion, a single e-mail tarnished a career - and a reputation - that took decades to build. Now, Mr. Quattrone, 52, is out to reclaim his professional life. On March 18, he unveiled his new firm, San Francisco-based Qatalyst Group, which plans to advise companies on acquisitions and raising capital, underwrite equity offerings and invest in deals alongside venture capitalists and buyout firms.

"This is about Frank's vindication," says a former CSFB banker who has spoken with him about Qatalyst's prospects. "He fell about as far as you can, and he wants to prove to the world that he's not only innocent but that he's back."