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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would trade and as part <strong>of</strong> its effort to continue to obtain substantial investment<br />
banking and advisory fees. Plaintiff purchased WorldCom stock in reliance on<br />
these representations.<br />
208. In May <strong>of</strong> 1995, Grubman started covering WorldCom and gave a<br />
“Buy” rating. He continued to tout the stock up until April <strong>of</strong> 2002 when he gave<br />
it a neutral rating. On May 13, 1997, for example, WorldCom’s shares increased<br />
after Grubman said that shares may double during the next 18 months as the<br />
company took market share from other companies. By October <strong>of</strong> 1997, news<br />
reports were referring to Grubman as an “outspoken admirer” <strong>of</strong> WorldCom based<br />
on his positive reports on the company.<br />
209. In November 1997, Grubman represented: “WordCom is at the<br />
intersection <strong>of</strong> everything we like – no carrier in the world can <strong>of</strong>fer the integrated<br />
set <strong>of</strong> facilities that it does. <strong>The</strong> company has nothing to lose and everything to<br />
gain.”<br />
210. On March 16, 1998, Grubman listed a “strong buy” rating for<br />
WorldCom and issued a 12-month stock price target <strong>of</strong> $60 and a 24-month target<br />
<strong>of</strong> $90 for WorldCom. He also predicted that during the next five years the<br />
company would post revenues-growth <strong>of</strong> 17% and earnings per share growth <strong>of</strong><br />
32%. Grubman represented: “We believe WorldCom should be able to sustain a<br />
multiple <strong>of</strong> EPS [earnings per share] similar to other large capitalization growth<br />
stocks which trade at more than 30 times their EPS. . . WorldCom has the most<br />
diverse set <strong>of</strong> strategic assets in the telecom industry, being the only true fully<br />
integrated provider <strong>of</strong> voice, data and internet protocal technology. . . <strong>The</strong><br />
business logic <strong>of</strong> the MCI transaction was very compelling, adding MCI’s base <strong>of</strong><br />
large customers, world class sales force and industry leading systems, s<strong>of</strong>tware<br />
and product set capabilities to WorldCom, a diverse set <strong>of</strong> local and international<br />
assets.” Grubman reported that WorldCom and MCI would increase their<br />
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COMPLAINT
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