Credit Guide

Frank Quattrone, who made $120 million in 2000 as Credit Suisse's top technology banker, won the right to a new trial today, after a federal appeals court threw out his conviction for obstructing justice.

Quattrone, 50, faces the prospect of a third trial before a new judge on charges he urged fellow bankers to destroy records. The U.S. 2nd Circuit Court of Appeals in New York today reversed Quattrone's conviction for obstructing justice and witness tampering and ordered a new trial, because ``jury instructions were erroneous,'' a three-judge panel said in a unanimous ruling.

``It's not uncommon for a prosecutor to try a case a second time, but when you start talking about a third time, it becomes a little more difficult, and they often become a little less inclined to do so,'' said Jacob Frenkel, a former federal prosecutor, now in private practice in Rockville, Maryland.

Ultimately the decision whether to retry the former investment banker rests with U.S. Attorney Michael Garcia. ``We are reviewing the opinion and considering our options,'' he said in a statement. Today's reversal may also lead the government and Quattrone to open plea negotiations.

Federal prosecutors in New York have already shown they're willing to try a criminal defendant three times to obtain a conviction. John A. ``Junior'' Gotti, 42, son of the late Gambino crime family boss, will go on trial in July for a third time on racketeering and extortion charges, after two mistrials. The most recent one came on March 10.

Bias

``For over three years during this difficult ordeal, I have held my head high knowing I was innocent and never intended to obstruct justice,'' Quattrone said in a statement. He was convicted in May 2004 after his first trial ended in a hung jury in October 2003.

Quattrone's lawyers had argued that U.S. District Judge Richard Owen, who presided over the first two trials, was biased against him. While the appeals court rejected that claim, the panel decided it was best to have a different judge preside over the third trial.

``Ultimately we believe that the interest and appearance of justice are better served by reassignment'' to a new judge, the appeals court said. The panel called Owen ``a dedicated jurist'' and said remarks the defense had objected to exceeded ``mere impatience or annoyance.''

Attorney John Keker, who defended Quattrone at both trials, said in an interview that he was ``gratified that justice has finally been done.'' Quattrone is ``very, very happy to have this off his back,'' his lawyer said, noting that the ex-banker has been in mourning over the recent death of his stepfather.

`Enough is Enough'

Keker said he didn't think a plea bargain was ``possible'' and added that he hopes the government will avoid a third trial and decide that ``enough is enough.'' He said he was glad the appeals court concluded that a new judge was needed.

``The most important factor'' in a possible third trial will be that Quattrone will have a new judge, Keker said. ``We had a tough time with Judge Owen.''

Owen sentenced Quattrone, who's been free pending the outcome of the appeal, to 18 months in prison.

Defense lawyer Mark Pomerantz, who represented Quattrone at his appeal, said in an interview that he will urge the government not to re-try the banker.

``We think there are a lot of reasons not to,'' he said.

Quattrone was convicted of hindering probes into how Credit Suisse allocated shares in initial public stock offerings. The conviction ended the career of a banker who took dozens of companies public, including Amazon.com Inc. in 1997. Quattrone is the only investment banker sentenced to prison for a role in the IPO scandal arising from the late 1990's Internet stock boom.

`Rife With Error'

The case hinged on a December 2000 e-mail written by a colleague urging Credit Suisse employees to ``clean up'' their files and discard documents. Quattrone forwarded the message after learning that a grand jury was investigating how Credit Suisse distributed IPO shares.

Quattrone endorsed the e-mail before passing it on, noting that he'd been a witness in a securities-fraud lawsuit. He said the experience led him to ``strongly advise'' Credit Suisse employees to follow the bank's document retention policy, which called for routine purging of some records.

Pomerantz told the appeals court in July that the trial ``was rife with error.'' He said that while Quattrone knew prosecutors had subpoenaed Credit Suisse, Owen never told jurors that they had to find that the government wanted documents from Quattrone's Palo Alto, California-based division in order to convict him.

`Glaring Deficiency'

The appeals court agreed, citing ``a glaring deficiency'' in Owen's instruction to the jury. Under the law, the panel had to find that Quattrone knew that the government wanted the documents he ordered destroyed, the court said. Owen failed to deliver such an instruction.

At the trial, Quattrone never disputed that he knew the Justice Department and the Securities and Exchange Commission were investigating Credit Suisse. He said he thought the investigations related to other areas of the bank.

Credit Suisse spokeswoman Victoria Harmon declined to comment on the appeals court ruling today.

Quattrone, the son of a garment presser and the grandson of an immigrant, was raised in a poor neighborhood of south Philadelphia. He earned scholarships to attend Stella Maris and St. Joseph's preparatory schools there and became the first member of his family to attend college, at the Wharton School and then Stanford University.

NASD

Today's ruling could help Quattrone's SEC appeal of a NASD order barring him from the securities industry for life, according to the defense team's statement. Quattrone claims he was punished for asserting his right against self-incrimination under the U.S. Constitution, the statement said.

``The second circuit's opinion highlights the injustice that would result if the SEC allows NASD to bar Quattrone from his profession simply for having asserted a fundamental constitutional right,'' the statement said.

The case is U.S. v. Quattrone, U.S. Court of Appeals for the Second Circuit, New York.

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