Lessons from the Six-Year Quattrone Ordeal: It Pays to Persevere Against the Government

The final lesson in the six–year saga of former Silicon Valley dotcom investment banking star Frank Quattrone is that persevering against the government pays. Mr. Quattrone, who has consistently maintained his innocence, finally ended his prosecution ordeal today when he and the government executed a non-prosecution agreement. Mr. Quattrone prevailed in three enforcement actions claiming improprieties stemming from his former role as a high flying investment banking star. First, the NASD charged Mr. Quattrone with “spinning” violations and undermining research analyst objectivity. At the same time, the NASD filed a complaint alleging that Mr. Quattrone failed to cooperate with an agency investigation when he asserted his Fifth Amendment rights. Based on this complaint, the NASD permanently barred him from the securities industry. After a successful appeal to the SEC, however, the NASD order banning him from the securities business was vacated and the NASD also dropped the “spinning” case. Lastly, Mr. Quattrone was charged criminally, for obstruction of justice, hindering an agency investigation and witness tampering arising out of his conduct during the government investigations of his investment banking activities. The first trial ended in a hung jury and although convicted during a second trial, the Second Circuit reversed the conviction on appeal. Mr. Quattrone’s legal woes ended with the government essentially agreeing to drop the case by signing a non-prosecution agreement. The agreement states that Mr. Quattrone will not be prosecuted if he continues to obey the law. Its been a long time for Mr. Quattrone but the lesson is clear: it can pay to persevere against the enormous weight of the government.