Charges have been laid against renowned Internet-era investment banker Frank Quattrone as part of a wider probe into questionable investment banking activities, including IPO pricing and analyst conflict of interest.

The U.S. securities regulator, NASD, said Quattrone, formerly the head of Credit Suisse First Boston’s technology sector investment banking unit, has been charged with “spinning” violations, as well as creating and overseeing a flawed organizational structure that undermined research analyst objectivity.

In a separate complaint filed today, NASD also charged Quattrone with failing to cooperate in an NASD investigation into whether he encouraged CSFB Tech Group employees to destroy documents after he was notified of NASD and federal investigations. Today’s complaints are an outgrowth of NASD investigations that began in May 2000.

The first of the two complaints filed today alleges that when Quattrone joined CSFB in 1998 he created what amounted to a firm-within-a-firm at CSFB, bringing with him dozens of colleagues and associates and fashioning an organizational structure under which research analysts, investment bankers, and brokers all reported to him. One way Quattrone’s Tech Group sought to win and retain investment-banking business was by “spinning” IPOs, giving access to hot IPOs to select corporate executives who could influence their employers’ choice of investment bankers. Another way the Tech Group sought to obtain business was by holding out to prospective clients the prospect of CSFB’s issuing favorable research about them.

By creating the inherently flawed reporting and supervisory structure under which these improper practices flourished, and by allowing and endorsing these practices, Quattrone violated NASD rules, NASD says. It also notes that this structure was enormously successful. In 1999, CSFB managed more U.S. IPOs than any other firm. In 2000, investment banking was the firm’s second-largest revenue source, generating US$3.68 billion, a 60% increase over the year before. Quattrone profited substantially as well. Between August of 1998 and the end of 2001, he personally received compensation of over US$200 million.

In January 2002, CSFB settled charges relating to this IPO profit sharing investigation, paying NASD and the SEC US$100 million.

“Recent investigations into conflicts of interest on Wall Street have shown that in too many cases in the past, investors’ interests were compromised for greater investment banking revenues,” said Mary Schapiro, NASD’s vice chairman and president of regulatory policy and oversight. “In restoring integrity to our markets and investor confidence in our industry, it is absolutely necessary that we hold individuals responsible for these abuses accountable. Institutions can only act through people and when individuals violate our rules, enforcement actions with meaningful sanctions must follow.”