Jack Grubman

Managing Director, Salomon Smith Barney (Citigroup)

Once the most prominent Wall Street telecom analyst, Jack Grubman is now the target of investigations into the lack of 'analyst independence' because he touted stocks to help his firm, Salomon Smith Barney, get investment banking business with WorldCom. Grubman advised WorldCom on all its acquisitions, including its failed Sprint bid. Grubman's firm made hundreds of millions in investment banking fees. Grubman was one of the biggest boosters of WorldCom and Ebbers. WorldCom stock had already fallen 89% from its peak in 1999 by the time Grubman made its first downgrade.

A former executive vice president at AT&T's consumer and small business division, Grubman counted WorldCom CEO Ebbers as a friend (Grubman attended his 1999 wedding), and it was Grubman who recommended AT&T executive Joe Nacchio to Philip Anschutz, the railroad magnate who was looking for a CEO for Qwest.

When Global Crossing went public in August 1998, Salomon and Merrill Lynch led the deal. The fees for the IPO alone totaled nearly $30 million. By the end of the year, Global Crossing's market cap had surged to $10 billion, but with its lackluster revenues and weak cash flow, it was a big company built on a tiny foundation. So Global Crossing CEO Winnick decided he'd follow the growth-by-acquisition model created by WorldCom, and would do so with Grubman's help.

And so Grubman talked up the stock. 'The impression that was given around the office was that Grubman was in Winnick's back pocket,' recalls a former Global Crossing employee who worked in the Beverly Hills headquarters. 'If news had to be put in a way that was positive to the company, Grubman would do it.'

IT 100 Analysts' Picks - Jack B. Grubman (BusinessWeek 18 June 2001)
Jack Grubman has been bloodied over the past year as many of his favorite stocks, notably WorldCom, have been hammered. So what is Grubman recommending these days? Well, WorldCom again tops the list. He also likes Qwest Communications International Inc and Global Crossing Ltd. More...