Frank is back.

Frank Quattrone, Silicon Valley’s most powerful investment banker in the 1980s and 1990s, picked a moment of maximum market turmoil to announce that he’s back in business. Yet despite predictions he’d start a private-equity firm, Quattrone instead is returning to his first love, straight-on investment-banking services to high-technology firms. His new outfit, Qatalyst Group, will start as a six-partner boutique in the mold of Greenhill & Co. (GHL), Evercore Partners and Moelis & Co., all firms started by former bankers at high-profile firms.

Another prediction that didn’t pan out: Quattrone’s new firm won’t include his former partners, George Boutros and Bill Brady, who together with Quattrone dominated the tech banking world for more than a decade as the team traveled from Morgan Stanley to Deutsche Bank to Credit Suisse, where Boutros and Brady remain. His five founding partners at Qatalyst are a group of 20- and 30-somethings, each of whom worked with Quattrone at Credit Suisse, though none was there immediately before joining Quattrone. The five are Jonathan Turner, 34, a former Internet banker and most recently a biz-dev executive at the online marketing company QuinStreet; Adrian Dollard, 38, the firm’s general counsel; Neil Chalasani, 29, who did a stint at Evercore; Brain Slingerland, 30, who decamped to Goldman Sachs after Credit Suisse; and Brian Cayne, 26, who came from Vista Equity Partners.

For a while, it looked like Quattrone’s name would be linked with the likes of Dennis Kozlowski and Jeffrey Skilling, both of whom are doing time in jail for crimes committed during the market mania that surrounded the dot-com craze. Yet Quattrone’s conviction on obstruction of justice was overturned and he was fully exonerated in 2006. He says he’d been thinking about starting a private-equity firm but decided instead to focus on what he knows best. “I’m more of a growth guy and a strategy guy,” he said, during a Tuesday-morning interview from his firm’s temporary offices in San Francisco.

For all the negative press Quattrone got during his trials, his support base in Silicon Valley remained remarkably strong. It showed in the big hitters he lined up for his firm’s inaugural news announcement. Google (GOOG) CEO Eric Schmidt, Intuit (INTU) Chairman and Valley consigliere Bill Campbell, Facebook investor and venture capitalist Jim Breyer, and Facebook CFO and former Yahoo (YHOO) treasurer Gideon Yu each lent their names to enthusiastic testimonials.

Quattrone says the new firm has no clients yet as it awaits approval of its broker-dealer registration, a process that could take up to six months. In the meantime, Qatalyst will operate as a division of JMP Securities (JMP), much the same way former UBS banker Ken Moelis operated initially as part of Mercanti Securities. Indeed, Moelis is more than a role model for Quattrone. He’s an example the kind of business Qatalyst hopes to win. Moelis currently is advising Yahoo on its defense of a Microsoft (MSFT) takeover bid, precisely the kind of assignment Quattrone wants to be in the position to take on. Qatalyst also will raise a fund for investing alongside its clients, though Quattrone says that initially the money will come from himself and his partners.

Quattone says that after some “soul searching” he realized that he doesn’t miss the empire-building and “liasing” with New York, Germany and Switzerland that went along with running outposts of major banks during the years he and his team backed iconic companies like Cisco (CSCO), Netscape and Amazon.com (AMZN). What he misses, he says, is giving “good, old-fashioned, honest advice.”

While Quattrone has been taking time to reflect, of course, his former minions have sprinkled themselves throughout Wall Street. Watching him and his new young recruits compete against them will provide some good, old-fashioned fun in Silicon Valley.

JMP Group, the eight-year-old niche investment bank in San Francisco, recently set the terms of its upcoming IPO. At an offering range of $10.50 to $12.50, JMP values itself at about $200 million. In other words, JMP is no Goldman Sachs (GS), which has a market cap of $89 billion. It’s also no Blackstone, which also plans to go public soon.

But the firm founded by refugees from the old Montgomery Securities is going public for same exact reason Goldman (as well as Thomas Weisel (TWPG), Lazard (LAZ), Cowen (COWN) and others), did: to get liquidity for its employees. Along with the 6 million shares JMP will offer to the public – with its own JMP Securities unit as lead underwriter – firm insiders are selling 1.92 million shares. First, it always says something about a company’s staying power when insiders sell in the IPO. It also shows how lucrative the securities business is, even for bit players like JMP. At the low end of its intended range insiders will sell $20 million worth of stock, or nearly six times what JMP earned in 2006.

If JMP pulls off the IPO, it will demonstrate that a mid-market firm doesn’t even need to be all that successful for its partners to make money. JMP’s fund-management business saw assets plummet from nearly $600 million at the end of 2005 to about $200 million at the end of last year due to “unsatisfactory performance,” according to the firm’s SEC filings. So its hedge funds were sliced by two thirds because they couldn’t keep up with the market and investors yanked their money. Yet JMP makes its money selling financial advice to others. Go figure.