There's a really amazing story doing the rounds on Wall Street about the recent resignation of Steven Rattner, the head of Credit Suisse's private equity arm, DLJ Merchant Banking.

Rattner stepped down last week to 'spend more time with his family', but it appears that it was an orchestrated smear campaign over an episode in his personal life which may actually have led to his departure from the firm.

This tale of intrigue has featured in several internet chat rooms over the last 2 months, and was the subject of an article earlier this week by New York Times journalist Andrew Ross Sorkin, who spoke to Rattner after his resignation. Rattner has admitted to having an affair with a married woman, Kelly Cosgrove, who he met in London some 5 years ago. Ms Cosgrove's then husband, Tommii (they subsequently divorced) recently surfaced and started to dish the dirt on the relationship. Asked by Sorkin why he waited almost 5 years to get his revenge on Rattner, Cosgrove said: 'I had to put my life back together again. He destroyed everything I had. And I had to find him'.

Cosgrove has alleged that his wife was working as an escort when she met Rattner, and that he offered her $500,000 to give it all up and be with him. Said to have taken Ms Cosgrove on several international trips, Rattner is also alleged to have 'showered' his new partner 'with exotic gifts'. After the relationship soured, Rattner is said to have dumped Ms Cosgrove (allegedly for a younger model), who then went through rehab and tried to commit suicide. Rattner is said to have confessed to his wife about the affair and then worked hard to make his marriage work. Cosgrove also alleges that Rattner offered him $70,000, through his ex-wife, to disappear.

Sorkin has suggested that all this bad noise had begun to make some of Rattner's colleagues nervous (DJL Merchant Banking is planning to raise money for a new investment fund), and that some were coming to think that he was becoming something of a liability (There is even talk about a book coming out on the story). Rattner told Sorkin that he was overcome by Cosgrove's viral campaign against him, saying: 'It's just amazing to me. And there is no way to fight back' (Ed's note - he could have sued). The banker, who is said to be worth as much as $1bn, is now intent on getting his life back in order. 'The damage is done', he said. 'Everyone has heard. (But) I love my wife and kids more than life itself'.

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