Posted on 08/16/2002 10:29:04 AM PDT by Gritty
NEW YORK (CBS.MW) - Salomon Smith Barney lead telecom analyst Jack Grubman resigned Thursday night, the latest and most prominent Wall Street casualty of the collapse of Worldcom into the nation's biggest bankruptcy.
Grubman, 48, who is being investigated by regulators for his role in the rise and fall of Worldcom (WCOEQ: news, chart, profile), said in a letter to Salomon employees that the "current climate of criticism has made it impossible to perform my work," and has hurt his family.
"The relentless series of negative statements about my work, all of which I believe unfairly single me out, have begun to undermine my efforts to analyze telecommunications companies," Grubman said.
The resignation is the latest high-profile shakeup on Wall Street as corporate accounting scandals continue to rip apart companies and the analysts who covered them. During the boom years of the late 1990s, telecom companies were the hottest buys in the stock market, as they built up enormous amounts of debt creating gigantic global networks. But as the companies now collapse under that debt, investors and regulators are turning up the heat on the analysts who recommended the stocks.
Grubman, one of Wall Street's most highly-paid analysts, said in the letter that he could no longer work at Salomon, a unit of Citigroup (C: news, chart, profile), because of the pressure of the investigations. He reiterated what he had said in testimony to Congress last month that he believes he has done nothing wrong.
"While I regret that I, like many others, failed to predict the collapse of the telecommunications sector and I understand the disappointment and anger felt by investors as a result of that collapse, I am nevertheless proud of the work I, and the analysts who worked with me, did," Grubman said in the letter.
Grubman will receive $32.2 million in severance pay, including the forgiveness of $19 million in a loan he received from the company four years ago, according to a report by Bloomberg News. He will also receive $12 million in restricted stock and options, the report said.
In July, Grubman testified that he was too optimistic on Worldcom stock but denied any advance knowledge of WorldCom's $3.8 billion earnings misstatement before downgrading the stock, for the fourth time on June 21, the day before the announcement.
At the time, House Financial Services Committee Chairman Michael Oxley urged the NASD to consider banning Grubman.
Oxley said he was disturbed by Grubman's "business-as-usual attitude" in his testimony before the committee.
"In his pursuit of riches, he has failed in his fiduciary obligations and deceived investors for too long," Oxley said. "It is my opinion that the NASD should consider barring Grubman from the securities industry."
Citigroup shares closed up $1.70 at $35.84 in regular trading Thursday. They were off about 30 cents at $35.54 in after-hours trading following the announcement.Shawn Langlois is community editor for CBS.MarketWatch.com in San Francisco.
Awww. We can have a fundraiser; otherwise, he might have to settle for a chintzy $2,000 shower curtain.
That's the same thing i was telling this buddy of mine around 3 minutes ago when he called me from out of state to tell me this.
My comments were rather succinct when he told me that 'Grubman had lost respect.' I told him that although i would like to be respected and honored it really would not matter to me that much if it was taken away and i was gievn a severance pay of 44 mil (actually it is more than that when you add all the other parts of the package....it is more like 62 mil).
True, i may smart for a while for the loss of 'respect' however i am sure when i am chilling in my palatial mansion calling up my off-shore banker to see how much my net worth has exploded i will not care what people say!
And I do not think Mr. Grubman will be 'hurting due to loss of respect' much longer (if at all).
If i were him i would be laughing all the way to the bank! Think of it ....he just totally screwed up myriads of investors (depending on which perspective you take) and yet he waltzes away with a fortune (small when compared to Gary Winnicks, but a fortune all the same).
And they say good always wins!
Ha! Only in comic books written in the 50s and 60s!
Gosh. Another Vast Right Wing Conspirator thinking out of the box!
The final chapter hasn't arrived here yet. In that one, it does win! In the meantime, we get "winners" like Grubman and Rubin!
Here is a story from 2000 which received little notice at the time:
U.S. Hedge Fund Supposedly Knew About Intervention (Robert Rubin's Citibank) ^
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