Lies, Damned Lies, and Business History

“It ain’t so much the things we don’t know that get us into trouble, it’s the things we do know that just ain’t so.” In a wonderful twist of fate, nobody knows who coined that aphorism, but that doesn’t keep it from being attributed to Mark Twain, Artemus Ward, and Josh Billings.

Writings about business history are full of things that people “know that just ain’t so.” A certain percentage of this unquestionably results from anti-business malice (see Matthew Josephson’s The Robber Barons). But much of it results simply from the human tendency to simplify historical narratives. Whatever the source of the falsehood, I believe it is important not to let these errors pass unremarked.

The most recent example that I have encountered comes from Christine Hurt, a professor at the University of Illinois College of Law. I follow Professor Hurt’s postings on the group blog called “The Conglomerate,” and that is where the slip-up occurred: in a blog post about Frank Quattrone , dated August 31.

Professor Hurt wrote: “You may remember that the DOJ tried Quattrone twice for allocating hot IPO shares to clients to get investment banking business, then decided not to retry a third time after a settlement was reached.  (Blog post backstory here .)”

The irony is that Hurt’s “backstory” link goes a post of her own—dated August 22, 2006—in which she makes quite clear that the charge against Quattrone was not “allocating hot IPO shares to clients to get investment banking business” (a practice known as “spinning”). The charge was obstruction of justice. In fact, Hurt’s earlier post correctly notes that it was not clear during the Quattrone trials whether there was anything illegal about spinning, so obviously that was not the charge against him. As Hurt’s earlier post correctly says: “This [obstruction of justice] was the sole charge in question in both of Quattrone’s trials.”

But if Professor Hurt got that much right, back in 2006, she apparently did fall into a different error at that time. She wrote: “In the course of investigating CSFB and Quattrone, investigators read an email in which Quattrone reminded others of the document retention policy at CSFB.” It is impossible to say with complete certainty, but Hurt is almost surely referring to the famous “clean up those files” email. I have written about this subject before , at great length, and shall not repeat myself here. The fact is that Quattrone did not send the “clean up those files” email; it was a colleague of Quattrone’s who sent it; Quattrone had nothing at all to do with its being sent; and thus the sending of that email could not possibly have been the basis for the government’s prosecution of Quattrone.

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