Amidst echos of the Supreme Court oral argument in the Arthur Andersen case, this NY Times article reports that the oral argument before the Second Circuit Court of Appeals in former Credit Suisse First Boston investment banker Frank Quattrone‘s appeal of his criminal conviction did not go well for the prosecution. Earlier posts on Mr. Quattrone’s appeal are here and here.
Mr. Quattrone was convicted in May 2004 of witness tampering and obstructing federal grand jury and SEC investigations into whether Credit Suisse First Boston was improperly requiring kickbacks in the form of larger than normal commissions from customers in exchange for hot initial public offerings. Mr. Quattrone was sentenced to a year and a half in jail, but — unlike former Merrill Lynch investment banker Daniel Bayly — remains free pending disposition of his appeal.
With the Supreme Court’s recent decision in the Arthur Andersen case as a backdrop, the three-judge appellate panel considering Mr. Quattrone’s appeal focused on how much the former investment banker needed to know about the investigations he was convicted of obstructing. As in the Andersen appeal, the judges focused on whether the trial judge’s instructions gave the jury leeway to convict Mr. Quattrone of a crime even if he lacked the requisite intent to commit the crime.

Mr. Quattrone’s appellate attorney contended during the oral argument that the trial judge should have instructed the jury that the prosecution had to prove that Mr. Quattrone knew that documents called for in government subpoenas were in his group’s files when he forwarded an email in December 2000 encouraging compliance with the group’s document retention policy. In response, the prosecution contended that the totality of the trial judge’s instructions — including that the jury was required to find that Mr. Quattrone acted with “corrupt intent” — was sufficient for the jury to connect Mr. Quattrone’s email with obstructing the government’s investigation.
Moreover, according to this USA News article, at least one of the panel judges was not too thrilled about the prosecution’s theory that Mr. Quattrone had violated securities laws regarding an allegedlly undisclosed payment:

At times, presiding Judge Richard Wesley seemed to support Quattrone’s side, especially about the prosecution’s suggestion at trial that Quattrone broke securities laws involving an undisclosed $2 million payment by a CSFB client.
Instead of just pushing the envelope, “You blew the side of the envelope out, didn’t you?” Wesley asked [the prosecution attorney].

Frankly, the Supreme Court’s Andersen decision appears dispositive in dispensing with at least the conviction of Mr. Quattrone on the witness-tampering charge because the trial judge instructed the jurors that they did not have to find that Mr. Quattrone even knew about the government probes to find him guilty of that charge. However, given the roulette nature of government prosecutions of business figures these days, even appellate courts get confused sometimes, as this Fifth Circuit decision in the Andersen appeal reflects.