FC: T.J. Rodgers: Frank Quattrone is honest and beset by scoundrels

From: Declan McCullagh (declanat_private)
Date: Fri May 02 2003 - 05:20:20 PDT

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    Date: Thu, 01 May 2003 15:25:53 -0400
    From: DPW <newwalkat_private>
    Subject: FW: T.J. in the Merc
    FYI, Douglas
    Posted on Thu, May. 01, 2003
    T.J. Rodgers: Frank Quattrone is honest and ethical;
    Credit Suisse is just cowardly
    By T.J. Rodgers
    THE Enron scandal was a conspicuous success of
    free-market corporate governance. The company is out
    of business; its officers are fired, broke and looking
    forward to years of litigation; and the auditing firm
    that let it happen no longer exists. The free market
    cleaned its own house thoroughly before government
    agencies could even get rolling.
    Nonetheless, there has been much collateral damage by
    the regulators-come-lately. New corporate governance
    guidelines mandated by the New York Stock Exchange
    eliminate the highly successful informal board
    structures typical of Silicon Valley companies, in
    favor of -- ironically -- the more formal board
    structure of Enron itself prior to its fall.
    Worst of all, there are legal careers to be made by
    hanging executives or investment bankers, even if they
    are innocent.
    I first met Frank Quattrone in 1986. He led the
    investment banking team at Morgan Stanley, the firm
    that handled the initial public offering of my
    company, Cypress Semiconductor. He and his team were
    -- and are -- extraordinarily competent, honest and
    ethical. That's why they made fabulous profits. That's
    why my company kept doing business with Quattrone as
    he and his team moved from Morgan Stanley to Deutsche
    Morgan Grenfell to Credit Suisse First Boston.
    Contrary to my experience with some investment
    bankers, I never had to second-guess Quattrone's team.
    In five offerings made over 16 years raising $875
    million for my company, I never had to worry that we
    were not getting a square deal.
    Our CFO always checked out the competition, but the
    other investment banking firms could only match the
    terms offered by Quattrone's team.
    The accusations that Quattrone offered allocated
    pieces of juicy IPOs to favored clients are
    ridiculous. First of all, allocating shares of an IPO
    is not now and never was illegal. All investment
    banking firms allocate shares. It's called selling.
    Secondly, Quattrone did not ever personally
    participate in the allocation process. It's the sales
    side of banking firms that pass out IPO favors, not
    the investment bankers. Over 16 years, as a preferred
    client with wafer fabrication plants requiring huge
    investments, I never once was offered any allocated
    IPO shares by Quattrone or anyone on his team.
    Other banking firms, with whom I had only marginal
    relationships, often offered me allocated IPO shares
    to curry favor. Frank did not -- he offered me
    competence, not petty bribes.
    On the very same day I read about Quattrone's alleged
    manipulation of the analysts covering his firm, I had
    placed a fourth -- unanswered -- phone call to the
    Credit Suisse First Boston semiconductor analyst to
    complain about his vacuous coverage of my company. In
    prior years, when I griped to Quattrone about the
    analyst problem du jour, I received a shoulder shrug,
    not a promise to ``fix the problem.''
    Quattrone's real crime is that he violated the ``Bill
    Gates law'' -- his competence made him too much money
    too fast. Big, new money creates resentment among
    some, and there's always a prosecutor -- a Joel Klein
    or a Marcia Clark -- ready to move up the food chain
    to ``protect America.''
    The new, 15-minutes-of-fame prosecutor is James Comey
    of New York, who claims illogically that Quattrone's
    one-sentence e-mail to his employees to follow Credit
    Suisse First Boston's approved company policy to
    destroy all but the final documentation on public
    offerings somehow obstructs justice on a totally
    different investigation, concerning an IPO allocation
    Credit Suisse's IPO allocations were performed by an
    organization not reporting to Quattrone with a
    documentation stream totally unrelated to the
    supposedly ``obstructed'' documents. Quattrone's case
    will be thrown out by the judge, unless another biased
    judge like Thomas Penfield Jackson hears his case. If
    not the judge, a jury will surely dismiss the sham
    When that happens, Credit Suisse First Boston should
    be screaming, ``I told you so.'' But Credit Suisse
    abandoned Quattrone, the man who took them to big-name
    status in the high-tech banking business, in a
    pathetic victory of politically correct cowardice over
    intelligence, competence and integrity.
    T.J. Rodgers is president and CEO of Cypress
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