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

[Declan McCullagh <declan () well com>]

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Date: Thu, 01 May 2003 15:25:53 -0400
From: DPW <newwalk () optonline net>
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.


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T.J. Rodgers is president and CEO of Cypress
Semiconductor.




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