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Wall Street's dot-com scapegoat - Buddy, can you spare a paradigm?

Published: 04 May 2004 11:21 BST

Frank Quattrone's extraordinarily lucrative career -- at the height of the dot-com boom as an investment banker at Credit Suisse First Boston he earned $120m (£67.1m) -- has come to an uncomfortable end.

He faces further civil charges in a separate legal action but his current conviction means that he is now barred from working in the securities industry for ten years. His conviction at the re-trial had added drama because it was widely assumed that he would fare even better second time around and walk away from court a free man, instead of facing up to two years in prison. The Financial Times's Lex column today points out that the firm with which he is most associated, Credit Suisse First Boston, has been selected to help out with Google's IPO, concluding that "CSFB appears to have emerged from the wreckage chastened, but with its franchise intact".

To anyone who was in Silicon Valley around at the time, the huffing and puffing and moralising surrounding Quattrone's conviction is enormously entertaining. Anyone who was there in the run-up to 2000 knows that the entire securities industry in the United States bears a heavy responsibility for the massive inflation in the value of Internet stocks and their subsequent collapse, which wiped an estimated $3tn off the value of the global economy at a stroke. Of course, the big losers here were the small investors and anybody with a pension, rather than the financial institutions involved, but that's the way big money plays.

The media also did its bit. We couldn't get enough of the dot-com story. I certainly released a little helium into the balloon as an editor at the Internet business magazine The Industry Standard, but we were not alone. Even the sensible chaps at the Financial Times briefly, and rather tragically, dubbed themselves the newspaper of the e-economy, with all the tragic futility of a middle-aged accountant sporting a Hoxton fin. The sober business journal Fortune resisted the calls of the dot-com sirens for a long time, but when it finally cracked, it went the whole hog. Its coverage became so focused on the Internet and technology stocks that at one meeting an editor could be heard asking plaintively for any story -- any story at all -- that wasn't about the Internet.

The greed of individual investors also played its part. I remember being lectured at the time by a very smart friend who patiently explained to me that I was a fool for not day-trading stocks, as I simply "could not lose".