In May of 2004, Frank Quattrone was convicted on charges of obstruction of justice and witness tampering. The case stemmed from claims the former Credit Suisse First Boston investment banker tried to block investigations by regulators into possible abuses of the white hot IPO market during the bubble. He successfully appealed the conviction, but under an agreement with prosecutors to avoid a third trial (his first trial ended in a hung jury), the government could go after him again if he does anything wrong before the deal expires in August.
So where does that leave Quattrone? I had an opportunity interview Quattrone, his first since his indictment in 2003. Quattrone is being careful as he eases back into public life. The interview was done by phone, with his publicist listening in, and no recording was allowed.
Quattrone says he's concerned about the shrinking IPO market, which some have blamed on post-Enron reforms. He worries that if it continues, the U.S. is going to be viewed as "the Europe to India and China.
Quattrone's phone call came after he gave a speech to Silicon Valley venture capitalists, closed to the media, where he outlined what he called a "disturbing” trend on "the shrinking U.S. IPO market." Quattrone says the capital raised by IPOs in the past six years averages about $2 billion a year. In the six years before that, 1995-2000, the average was about $5 billion a year. And he says it takes a startup about six years to either go public or be bought. It used to take half that time.
Quattrone says he's been "concerned” that the trend could “choke off the entrepreneurial spirit that makes our country great." Quattrone would not go so far as to place blame, but says he's encouraged that business and political leaders are starting to recognize there's a problem--even New York's governor Eliot Spitzer, who recently called for some tweaking of Sarbanes-Oxley rules. Quattrone said, "I don't what to say it's like Nixon going to China, but a lot of the rules the investment banking community has to live with could be why there are fewer IPOs."
But in an e-mail I received after first reporting that comment last night, Quattrone clarified that he did not "exclusively or even primarily" blame the drop in IPOs on the new investment banking rules.
So, what's ahead for Quattrone? He says he hasn't decided yet but he does plan to start a business and hinted it may involve private equity. And what does the man who had the midas touch in Silicon Valley like for investments these days? He's bullish on technology--specifically wireless, voice over internet and the whole environmental “green thrust.”