The Regents - University of California | Office of The President

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Much like his colleagues, Grubman made little of the
negative signals about the two companies combining,
assuring investors in a February report that “Justice was
likely to clear the Sprint deal by June.” He urged
investors to buy WorldCom stock and said “the
regulatory process is far less onerous than investors
think, especially with the European Union likely not
even to review the transaction.”
223. In September of 2000, when WorldCom’s stock was near a 52-week
low, Grubman gave a positive recommendation on the stock. According to
Communications Today, September 11, 2000:
Wall Street continued to punish the telecom sector
Friday. Share prices of AT&T [T], Sprint [FON] and
WorldCom [WCOM] danced around new 52 week lows,
as intense competition in the consumer long distance
arena continued to erode investor confidence in the big
three carriers.
However, according to some analysts, WorldCom’s latest
acquisition of Intermedia Communications [IXIC] for $6
billion in equity and debt assumption has added a key
player to its lineup in the form of Digex. . . .
“Given its array of global network assets, we think that
Digex– on top of the WorldCom asset base– can
leverage topline growth at WorldCom to a much greater
degree than is being anticipated at this time,” wrote Jack
Grubman of Salomon, Smith Barney in his latest analysis
of WorldCom. [] Grubman says that WorldCom and
Digex are a natural fit. . .
224. Once again, in January of 2001, with the market declining, Grubman
“strongly reiterated” a buy rating for WorldCom, calling it the firm’s top pick in
the telecom services business. He also said he saw it meeting its 12% to 14%
revenue growth projections and set a target price of $45. That was enough to run
the stock up $1.88 to $15.94 for the session.” TheStreet.com, January 3, 2001; see
also The Toronto Star, January 4, 2001 (“Analysts said that some of the
enthusiasm for telecom stocks was sparked by an upbeat report on WorldCom by
Salomon Smith Barney analysts.”)
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COMPLAINT