--- Date: Thu, 01 May 2003 15:25:53 -0400 From: DPW <newwalkat_private> Subject: FW: T.J. in the Merc FYI, Douglas http://www.siliconvalley.com/mld/siliconvalley/5759461.htm 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 investigation. 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 charges. 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 Semiconductor. ------------------------------------------------------------------------- POLITECH -- Declan McCullagh's politics and technology mailing list You may redistribute this message freely if you include this notice. ------------------------------------------------------------------------- To subscribe to Politech: http://www.politechbot.com/info/subscribe.html This message is archived at http://www.politechbot.com/ Declan McCullagh's photographs are at http://www.mccullagh.org/ Like Politech? Make a donation here: http://www.politechbot.com/donate/ -------------------------------------------------------------------------
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