Word: worldcom
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Dates: during 2000-2009
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...dealing by analysts has the SEC intensified its efforts, currently looking at other firms too, like Salomon, where telecom analyst Jack Grubman earned more than $10 million a year reeling in underwriting clients. That princely pay had nothing to do with his stock advice. Grubman rated the disastrous stock WorldCom a strong buy until mid-March, although it was down 88% from its June 1999 peak. Salomon--which has told Spitzer it did not save e-mails between analysts and bankers, as required by the SEC--says Grubman acted out of conviction, not self-interest...
Even the notorious penny pinching that had delighted Wall Street in WorldCom's heyday came to look eccentric, if not petty. As WorldCom began laying off close to 10% of its 80,000 worldwide employees this year, Ebbers took away such perks as coffee machines and monthly $25 long-distance credits...
...efficiencies he had promised. One reason: for all his aw-shucks manner, Ebbers had come to prefer the glamour of dealmaking to the quotidian work of integrating and running a complex business. "At one time we had more than 40 different billing systems," grouses a former high-level WorldCom executive. Ebbers' solution? Keep buying. His latest target was Sprint, but U.S. and European regulators told him no, a setback that accelerated WorldCom's decline...
...about the same time, the world began to learn a lot more about WorldCom's big loans to Ebbers, intended to help him pay off margin loans so that he wouldn't be required to sell huge blocks of WorldCom stock--a move that might stampede already jumpy investors. Ebbers last week said he had "a 1,000% clear conscience" about the loans, $366 million of which he still owes. But he conceded, "We probably shouldn't have done it." Says a top WorldCom exec: "Tying up so much of your financial life in one single investment like that...
Perhaps. But his faith in WorldCom was and is classic Ebbers, and many individual shareholders find it endearing. To hold on to more of his WorldCom stock, he recently sold a favorite toy: a 60-ft. yacht he had named Aquasition. --With reporting by Alice Jackson Baughn/Ocean Springs