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-- August 16, 2002
Salomon Smith Barney jettisoned problem child Jack Grubman, but that doesn't mean it is done with Grubman or that its legal woes are over with respect to investigations and class-action lawsuits based on the "stock rock star's" advice.
After all, Salomon had to cough up $32.2 million in severance. PLUS, the company will pay Grubman's legal fees related to any of his ratings advice -- that could amount to millions more!
Still, Grubman's departure means that investors will no longer be subject to his misleading and often costly recommendations. Just take a look at Grubman's unimpressive track record: AT&T; ... down 77.8% ... Qwest ... down 92.6% ... WorldCom ... down 96.7% ... Level 3 Communications ... down 97% ... Global Crossing ... down 99.9% ... In all, 14 of the telecoms Salomon pushed off on investors have either defaulted on their debt or filed for Chapter 11 bankruptcy protection. Many are now trading like penny stocks, or worse!
Salomon is desperately trying to distance itself from the bad press it has received because of its analyst recommendations. But don't be fooled into thinking Salomon is actually changing its ways ... it's just changing the names.
Embattled Grubman Resigns In 'Mutual' Pact With Salomon