The Regents - University of California | Office of The President

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225. In March 2001, Grubman “reiterated his buy rating on WorldCom and
raised his growth forecast for the first quarter to 12.5% from 12% and to 14%
from 13.2% for the full year 2001. Grubman cited gains in Europe.”
TheStreet.com, March 14, 2001. A this time, Ebbers was trying to boost the stock
so that WorldCom could receive a take-over bid at $50 per share.
226. In April of 2001, after WorldCom announced its fourth quarter
earnings, Grubman “raised his first-quarter earnings growth expectations for
WorldCom’s data unit to 12.5% from 12% , and increased the full target to 14%
from 13.2%.” The Mississippi Business Journal, April 2, 2001. At the time, the
telecom industry looked “rather bleak” and the industry had been depressed for
most of the last year. Ibid.
227. In June of 2001, Grubman put WorldCom on the top of his list.
“Grubman expects WorldCom’s revenues will grow 12% to 15% next year,
pushing its stock from 18 to 30 within a year.” Business Week, June 18, 2001.
228. In October of 2001, after WorldCom disclosed its Third Quarter 2001
results, Grubman represented that WorldCom “has the most leverage among any
telecom company” and maintained a “Buy” recommendation.
229. In January of 2002, when the stock was at record lows, Grubman still
maintained his “Buy” recommendation and urged investors to buy the stock
because WorldCom was the “best play” for recovery.
230. On March 12, 2002, after WorldCom disclosed the SEC investigation,
Grubman downplayed the SEC inquiry as unfortunate, calling it just one of many
SEC inquiries this year. New York Times, March 13, 2002.
231. It was not until April 21, 2002, (WorldCom stock closed at $4.01 the
day before) that Grubman issued a neutral rating. He did not rate it as an
underperforming stock until June 24, 2002 (it closed at $.91 the day before).
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COMPLAINT