Brokers Sue Salomon Analyst Jack Grubman
Former Salomon Smith Barney brokers
blame the telecom booster for losses by WorldCom employees who followed
Grubman’s advice
New York – February 25, 2002 — Two Smith Barney
brokers in Atlanta built up $2 billion in assets by handling the options
business of WorldCom employees. When the telecom stock crashed, the customers
sued for damages. Now, the brokers are fighting back. In an exclusive March
cover story, Registered Rep, the No. 1 magazine for investment
professionals, details how Philip Spartis and Amy Elias wound up suing Smith
Barney, their former employer who, they say, settled client claims in part to
protect Grubman, who brought in huge investment-banking deals from clients such
as WorldCom during the telecom boom.
According to their account in PRIMEDIA’s Registered
Rep, Spartis and Elias advised clients not to over-concentrate in
WorldCom and warned them about the dangers of buying WorldCom shares on margin.
But, they say, Grubman’s excessive bullishness convinced their
clients—including prominent WorldCom executives—to ignore their brokers’
advice. Spartis and Elias have also brought claims against Salomon Smith Barney,
alleging that by settling some of the client claims the company has ruined the
brokers’ careers in the brokerage business.
PRIMEDIA’s Registered Rep was the first to break this compelling story today on its Web site www.registeredrep.com.
The full story appears in the March issue of the magazine, which will
reach 92,000 investment professionals during the first week of March.
“This story is not just an account of a private
dispute, but has implications for every financial advisor in the industry,”
said David Geracioti, editor of PRIMEDIA’s Registered Rep. “Spartis and Elias’ tale touches on a bunch of
industry issues, one of which is,
just how much can brokers really trust their own research departments? I think
brokers have had an epiphany and that is perhaps their own firms don’t have
the brokers’ best interest at heart. Analysts basically were shilling for
their investment banking businesses—at the expense of brokers and their
clients.”
As detailed in the Registered Rep story, current and
former Worldcom employees have filed complaints against the brokers and Smith
Barney with the National Association of Securities Dealers, seeking damages in
the range of $35 million. When Barney began settling the complaints, rather than
defending them, Spartis and Elias objected because they feared that the
information on their NASD files would ruin their chances in the brokerage
business.
On February 4, 2002, Spartis and Elias received a letter
signed by Smith Barney’s regional director H. Wayne Hutton, stating that the
two were no longer Smith Barney employees. The brokers maintain that they were
forced out largely because they wouldn’t agree to the settlements and because
they feel Smith Barney is responsible for the unsuitable investments.
For more details, visit www.registeredrep.com.
The full story will appear in the March issue of PRIMEDIA’s Registered
Rep magazine.
About PRIMEDIA’s Registered Rep
Registered
Rep is the preferred magazine
of retail investment professionals. Each monthly issue reaches approximately
92,000 loyal subscribers who control trillions of dollars of assets for more
than 30 million investors. These powerful financial advisers are licensed to
sell a broad range of investment products and rely on Registered Rep's
rich portfolio of timely features, articles, departments and columns. Registered
Rep is part of PRIMEDIA's Financial Services group which also includes Trusts
& Estates,
National Real Estate Investor and Shopping Center World. These
are among the 90 PRIMEDIA
Business Magazines and part of PRIMEDIA (NYSE: PRM), the world's largest
targeted media company. More
information about the Registered Rep can be found at www.registeredrep.com.
About
PRIMEDIA
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new tradition in media. With 2000 sales of $1.7 billion from a unique
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###
Contact:
Jessica
Prah, 212-446-1874
Noelle
Wojciehowski, 212-462-3658
