The Regents - University of California | Office of The President
The Regents - University of California | Office of The President
The Regents - University of California | Office of The President
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196. Salomon and Grubman are being investigated by federal authorities<br />
for Grubman’s reversing a rating about ATT to help Salomon win a lead role in<br />
the $10.6 billion IPO <strong>of</strong> its AT&T wireless unit. According to news reports, in<br />
1999, Citicorp’s Chairman and CEO, Sanford Weil, asked Grubman “to take a<br />
fresh look” at ATT. In the fall <strong>of</strong> 1999, shortly before ATT’s public <strong>of</strong>fering,<br />
Grubman upgraded the stock from his previous hold rating. As a result, Salomon<br />
became the lead manager earning $45 million in fees and Weil helped Grubman<br />
get his twins into a prestigious New York City nursery school. On November 20,<br />
2002, in an “Op-Ed” for the Financial Times, Roel Campos, Commissioner <strong>of</strong> the<br />
SEC, stated: “Most recently, reports have emerged that Jack Grubman, Citibank’s<br />
star analyst issued positive research in order to induce his chief executive to help<br />
him gain admission to pre-school for his children.”<br />
197. <strong>The</strong> New York Attorney General’s Complaint contains comments<br />
made by Salomon’s retail brokers about Grubman, including the following:<br />
Jack Grubman is not an analyst– he is an investment<br />
banker. He sold us a bill <strong>of</strong> goods on WCOM & T, and<br />
now we’re bleeding red in our client’s accounts. How<br />
about sharing some <strong>of</strong> the $25MM salary with our clients<br />
who bought his glorified stories? Whose team is<br />
Grubman on?<br />
Has cost millions <strong>of</strong> dollars for SSB [Salomon] clients. I<br />
am appalled that he is now in a position to pr<strong>of</strong>it from<br />
our clients’ losses, through his WCOM invsetment (sic)<br />
banking function. This sends a strong message that retail<br />
clients and retail brokers don’t matter.<br />
State <strong>of</strong> New York v. Anschutz et al., 65, pages 20-21.<br />
198. Specifically, Grubman’s compensation was tied to his relationship<br />
with WorldCom and Ebbers. According to a September 1, 1998 tele.com article,<br />
Grubman was able to negotiate a $25 million deal with Salomon because he<br />
brought in WorldCom as a client and his “clout” with Ebbers. Grubman,<br />
depended on investment banking fees from WorldCom for his compensation<br />
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COMPLAINT
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