CHAPTER 1
1. Jack Grubman, “United Telecom: Sprint Will Be the ‘DEC’ of Long Distance” (New York: PaineWebber, March 1, 1988).
2. Morgan Stanley Research document, page 2, date unknown but believed to be 1986 (from author’s files).
3. Michael Siconolfi, “Under Pressure: At Morgan Stanley, Analysts Were Urged to Soften Harsh Views,” Wall Street Journal, July 14, 1992, p. A1.
4. Morgan Stanley, “The Equity Research Incentive Plan,” draft, internal document, (January 23, 1990) p. 3.
CHAPTER 2
1. Michael Siconolfi, “Under Pressure: At Morgan Stanley, Analysts Were Urged to Soften Harsh Views,” Wall Street Journal, July 14, 1992, p. A1.
CHAPTER 3
1. United States vs. Jeffrey Sudikoff and Edward Cheramy, case no. CR 97-1176-DDP, June 1996. Grand Jury charges, pp. 8–13, paragraphs 18–28.
2. Thomas C. Newkirk and Steven A. Yadegari, “Recent SEC Financial Fraud Reporting Cases and SEC Cases Involving Accountants and Auditors,” U.S. Securities & Exchange Commission Division of Enforcement, Jan. 9, 2002, p. 16.
3. U.S. District Court, Central District of California, U.S. vs. Jeffrey Sudikoff and Edward Cheramy. Plea Agreement for Jeffrey P. Sudikoff, case no. CR 97-1176-DDP, February 19, 1999. Plea Agreement for Edward Cheramy, same case number and name, May 28, 1999.
4. Mark Landler, “The Siskel and Ebert of Telecom Investing,” New York Times, February 4, 1996, sec. 3, p. 1.
5. Institutional Investor, “The Class of 1972: Where Are They Now?” October 1, 2001, p. 112.
6. Mark Landler, “The Siskel and Ebert of Telecom Investing,” New York Times, February 4, 1996, sec. 3, p. 1.
CHAPTER 4
1. Jack Grubman, “Merrill Commentary on Teleport/MFS Comparison Flawed” (New York: Salomon Brothers, June 18, 1996).
2. Stephen E. Frank, “Analysts Pay Set a Record Last Year,” The Wall Street Journal, June 29, 1994, p. C2.
3. Anita Raghavan, “For Salomon, Grubman is the Big Rainmaker,” Wall Street Journal, March 25, 1997, p. C1.
CHAPTER 5
1. Steven Lipin, “British Telecommunications and MCI Unveil $20.88 Billion Merger Agreement,” Wall Street Journal, November 4, 1996, p. A1.
2. Richard Waters, “Curtain Still to Rise on the Concert,” Financial Times, July 17, 1997, p. 26.
3. Gary Weiss with Phillip Zweig, Debra Sparks, and Kerry Capell in New York; Leah Nathans Spiro in Hong Kong; and bureau reports; “Sandy’s Triumph,” Business Week, October 6, 1997, p. 34.
4. David Faber, Power Lunch, CNBC, August 21, 1997, 12:30–2:00 PM.
5. Jack Grubman, “Ramifications of SBC Announcements: Bell vs. Bell Warfare” (New York: Salomon Smith Barney, May 11, 1998, 10:09 AM).
6. Jack Grubman, “CLECs Surpass Bells in Net Business Line Additions for the First Time” (New York: Salomon Smith Barney, May 6, 1998).
7. Jack Grubman, “Ramifications of SBC Announcements: Bell vs. Bell Warfare” (New York: Salomon Smith Barney, May 11, 1998, 10:09 AM).
8. Jack Grubman, “SBC: Upgrade to Buy; SBC Separating Itself From Other Bells” (New York: Salomon Smith Barney, January 7, 1999).
CHAPTER 6
1. Lynn Margherio, (project director), The Emerging Digital Economy, U.S. Department of Commerce, April 1998, p. 2.
2. Blaise Zerega, “The Next Ma Bell,” Red Herring, May 1999, no page number available.
3. Level 3, “Underwriters Performance Review for Equity Offering,” company document, February 23, 1999.
4. Jack Grubman, “Level 3 Communications: Optimizing a Layer of the Telecom Value Chain: The Intel Inside of Telecom” (New York: Salomon Smith Barney, February 22, 1999).
5. Barbara Martinez, “Analyst’s Report on Level 3 Sparks Questions of Timing,” Wall Street Journal, April 3, 1999, p. C1.
6. Kate O’Sullivan, “Flashbacks: 20 Years of Finance,” CFO Magazine, March 2005, no page number available.
7. Linda C. Quinn, (Shearman & Sterling), “Research Reports and Proxy Rules,” letter for Merrill Lynch, Pierce, Fenner & Smith Inc., October 21, 1997.
8. U.S. Securities and Exchange Commission, “Response of the Office of Chief Counsel and the Office of Mergers and Acquisitions, Division of Corporation Finance Re: Merrill Lynch, Pierce, Fenner & Smith Incorporated (the ‘Company’), Incoming letter dated October 21, 1997,” October 24, 1997.
CHAPTER 7
1. “The 1999 All-American Research Team,” Institutional Investor, October 1, 1999, p. 120.
2. Seth Schiesel, “Private Sector: A Tele-Miscommunications Deal,” New York Times, May 23, 1999, sec. 3, p. 2.
3. Linda Himelstein, with Steve Hamm and Peter Burrows, “Inside Frank Quattrone’s Money Machine,” Business Week, October 13, 2003, p. 104.
4. Avital Hahn, “Defections Disrupt Telecom Research at Merrill,” Investment Dealer’s Digest, December 20, 1999, no page number available.
5. Rebecca Blumenstein, “AT&T Mulls Wireless IPO to Get Capital,” Wall Street Journal, November 26, 1999, p. A3.
6. Randall Smith and Leslie Cauley, “Will Upgrade of AT&T Stock Help Salomon Smith Barney?” Wall Street Journal, December 6, 1999, p. C1.
7. Steven Lipin and Rebecca Blumenstein, “Fee Frenzy: Wall Street Heavyweights Feast on AT&T’s Offering,” The Wall Street Journal, February 4, 2000, p. C1.
CHAPTER 8
1. Bloomberg News, “Michael Jordan Sues MCI over Ad Deal,” Los Angeles Times, March 4, 2005, p. C3.
2. Thor Valdmanis, “German Phone Giant in Talks with Qwest,” USA Today, March 1, 2000, p. 1B.
3. Recorded proceedings of the CSFB Global Telecom CEO Conference, March 6–10, 2000, the Plaza Hotel, New York City.
4. Ibid.
5. Ibid.
6. Ibid.
7. Andrew Backover, “US West’s Trujillo Hangs It Up: 1 Head Better than 2 After Merger, He Decides,” Denver Post, March 1, 2000, p. A1.
8. Recorded proceedings of the CSFB Global Telecom CEO Conference, March 6–10, 2000, the Plaza Hotel, New York City.
9. Jamey Keaten, “Qwest, US West Are Edgy: After Telekom’s Failed Bid, an Uneasy Alliance Could Affect Companies’ Stocks,” CNN/Money.com, March 10, 2000, http://money.com.cnn/2000/03/10/deals/qwest_analysis.
10. Andrew Kupfer, “Bernie’s Big Gamble: Ebbers Wants It All: Voice and Data, Local and Global, Business and Consumers. Sprint May Help Him Get It,” Fortune, April 17, 2000, p. 178.
11. Dan Reingold, “WorldCom: There Must Be Some Way Out of Here—But All Lead to Lower Target Prices” (New York: Credit Suisse First Boston, June 27,2000) p. 1.
12. U.S. Department of Justice, “U.S. Justice Department Sues to Block WorldCom’s Acquisition of Sprint,” press release, June 27, 2000.
13. Peter Elstrom, “The Power Broker,” Business Week, May 15, 2000, pp. 72–3.
14. Ibid.
15. U.S. Securities and Exchange Commission, “Commission Votes to End Selective Disclosure,” 2000–112, press release, August 10, 2000.
16. Randall Smith, Deborah Salomon, and Suzanne McGee, “Grubman’s Missed Call on AT&T Stock Could Affect Influential Analyst’s Stature,” Wall Street Journal, October 4, 2000, p. C1.
17. “WorldCom, Inc. Issues New Financial Guidance,” press release, November 1, 2000, author’s files.
18. Patrick Ross, “WorldCom CEO loses his swagger,” CNET news.com, November 1, 2000, http://news.com/2102-1033_3-247973.html.
CHAPTER 9
1. Stephanie N. Mehta, “Can Bernie Bounce Back?” Fortune, January 22, 2001, p. 84.
2. “CSFB’s Reingold on Possible WorldCom Sale: Analyst Comment,” Bloomberg News, March 7, 2001.
3. Christopher Caldwell, “Literary Heroes of the Stock-Market Crash,” Daily Standard, October 3, 2002, no page number available.
4. Rebecca Blumenstein, “Overbuilt Web: How the Fiber Barons Plunged the Nation into a Telecom Glut,” Wall Street Journal, June 18, 2001, p. A1.
5. Peter Elstrom, “On the Firing Line at Qwest,” Business Week, October 29, 2001, p. 72; Bill Mann, “Eyes on the Wise,” The Motley Fool.com, June 22, 2001, http://aol.fool.com/news/2001/9010622.htm.
6. Peter Elstrom, “On the Firing Line at Qwest,” Business Week, October 29, 2001, p. 72.
7. Peter Elkind with Mary Danehy, Jessica Sung, and Julie Schlosser, “Where Mary Meeker Went Wrong,” Fortune, May 14, 2001, p. 68.
8. Gretchen Morgenson, “S.E.C. Warns Investors on Analysts,” New York Times, June 30, 2001, p. C1.
CHAPTER 10
1. Julie Creswell with Nomi Prins, “The Emperor of Greed; With the Help of His Bankers, Gary Winnick Treated Global Crossing as His Personal Cash Cow—Until the Company Went Bankrupt,” Fortune, June 24, 2002, p. 106.
2. Gretchen Morgenson and Timothy L. O’Brien, “When Citigroup Met WorldCom,” New York Times, May 16, 2004, sec. 3, p. 1.
3. Geraldine Fabrikant, “As Shares Sink, Some Executives Shed Costly Toys,” New York Times, March 24, 2002, sec. 3, p. 7.
4. Emily Thornton with Peter Elstrom in New York and Mike McNamee in Washington, “Trying to Build a Wall on Wall Street: How Far Will New York Attorney General Eliot Spitzer Be Able to Separate Research Analysts and Investment Bankers?,” Business Week, April 29, 2002, p. 40.
5. Jack Grubman, “WCOM: Dramatic Change in EBITDA Guid. Too Much to Ignore—Downgrade to Neutral” (New York: Salomon Smith Barney, April 21,2002).
6. Kris Hudson and Miles Moffeit, “Unmasking Qwest,” Denver Post, December 17, 2002, p. A1.
7. “SEC Files Charges Against Ex-Qwest Chief Nacchio,” Wall Street Journal, March 15, 2005.
8. Securities and Exchange Commission, Plaintiff, vs. Joseph P. Nacchio, Robert S. Woodruff, Robin R. Szeliga, Afshin Mohebbi, Gregory M. Casey, James J. Kozlowski, Frank T. Noyes, Civil Action No. 05-MK-480 (OES), March 15,2005.
9. U.S. Congress House Committee on Financial Services Hearing, Wrong Numbers: The Accounting Problems at WorldCom, serial no. 107–74, July 8, 2002, 1st session.
10. Jared Sandberg, “Bernie Ebbers Bet the Ranch—Really—on WorldCom Stock,” Wall Street Journal, April 12, 2002 (as retransmitted by the Associated Press).
11. Steven Rosenbush with Heather Timmons, Roger O. Crockett, Christopher Palmieri, and Charles Haddad, “Inside the Telecom Game: How Salomon’s Jack Grubman Wheeled and Dealed with WorldCom, Qwest, Global Crossing, and Others,” Business Week, August 5, 2002, pp. 34–40.
12. Charles Gasparino, Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors (New York: Free Press, 2005), p. 276.
13. Gretchen Morgenson, “Bullish Analyst of Tech Stocks Quits Salomon,” New York Times, August 16, 2002, p. A1.
14. Citigroup, “Telecom Analyst Jack Grubman to Leave Salomon Smith Barney,” press release, August 15, 2002.
15. Securities and Exchange Commission, Plaintiff vs. Joseph P. Nacchio, Robert S. Woodruff, Robin R. Szeliga, Afshin Mohebbi, Gregory M. Casey, James J. Kozlowski, Frank T. Noyes, Civil Action No. 05-MK-480 (OES), March 15, 2005.
16. Much of the material in this section comes from the following stories: Charles Gasparino, “Grubman Boast: AT&T Upgrade Had an Altogether Different Goal,” Wall Street Journal, Nov. 13, 2002, p. A1; Charles Gasparino, “Citigroup Investigation Leads to Door of Elite Nursery School,” Wall Street Journal, November 14, 2002, p. A1; Gretchen Morgenson and Patrick McGeehan, “Wall St. and the Nursery School: A New York Story,” New York Times. November 14, 2002, p. A1; Patrick McGeehan, “More Details On Message By Ex-Analyst For Citigroup,” New York Times, November 15, 2002, p. C1; and Charles Gasparino, “Ghosts of E-Mails Continue to Haunt Wall Street,” Wall Street Journal, November 18, 2002, p. C1.
17. Charles Gasparino, “Ghosts of E-Mails Continue to Haunt Wall Street,” Wall Street Journal, November 18, 2002, p. C1.
18. This and following quotes from Charles Gasparino, Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors (New York: Free Press, 2005), pp 167–68.
19. E-mail in Attorney General of the State of New York Bureau of Investment Protection, In the Matter of Jack Benjamin Grubman. Assurance of Discontinuance Pursuant to Executive Law Section 63 (15). April 21, 2003. Exhibit 1.
20. Attorney General of the State of New York Bureau of Investment Protection, In the Matter of Jack Benjamin Grubman. Assurance of Discontinuance Pursuant to Executive Law Section 63 (15). April 21, 2003. Exhibit 1.
21. Citigroup, “Statements are Released by Weill and Citigroup,” press release, November 13, 2002.
22. Letter from Jack Grubman to C. Michael Armstrong, Chairman and CEO, AT&T, August 19, 1999, in Attorney General of the State of New York Bureau of Investment Protection, In the Matter of Citigroup Global Markets Inc. (formerly known as Salomon Smith Barney Inc.). Assurance of Discontinuance Pursuant to Executive Law Section 63 (15). April 21, 2003. Exhibit 1.
23. Quotes in this section come from a memo to Sanford I. Weill from Jack B. Grubman, dated November 5, 1999, re: “AT&T and the 92nd Street Y,” in Attorney General of the State of New York Bureau of Investment Protection, In the Matter of Jack Benjamin Grubman. Assurance of Discontinuance Pursuant to Executive Law Section 63 (15). April 21, 2003. Exhibit 1.
24. E-mail dated November 29, 1999, re: “Urgent Message from Jack Grubman re: AT&T Report” in Attorney General of the State of New York Bureau of Investment Protection, In the Matter of Jack Benjamin Grubman. Assurance of Discontinuance Pursuant to Executive Law Section 63 (15). April 21, 2003. Exhibit 1. The e-mail reads: “John/Bob, The AT&T Report must be edited and mailed out to the printers today so it can be distributed in time to meet Sandy Weill’s deadline (before the AT&T meeting).”
25. U.S. District Court for the Southern District of New York, SEC vs. Jack Benjamin Grubman, April 28, 2003, p. 20.
26. Internal memo to Senior Management Team of AT&T from Connie Weaver, “Lehman Brothers First Call Note,” May 18, 2000, in Attorney General of the State of New York Bureau of Investment Protection, In the Matter of Jack Benjamin Grubman. Assurance of Discontinuance Pursuant to Executive Law Section 63 (15). April 21, 2003. Exhibit 1.
27. Citigroup, “Statements are Released by Weill and Citigroup,” press release, November 13, 2002.
28. Charles Gasparino, Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors (New York: Free Press, 2005), pp. 166, 169, and 289.
29. Charles Gasparino, Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors (New York: Free Press, 2005), pp. 287 and 294.
30. Daniel Dunsief, “Sexy E-mails Heat Up Wall Street Probe,” New York Daily News, November 15, 2002.
31. Office of New York State Attorney General Eliot Spitzer, “SEC, NY Attorney General, NASD, NASAA, NYSE and State Regulators Announce Historic Agreement to Reform Investment Practices,” press release, December 20,2002.
32. Janet Guyon, “Jack Grubman Is Back: Just Ask Him,” Fortune, May 16, 2005, p. 118.
EPILOGUE
1. Michael Gormley, “Former Qwest Exec to Pay $4.4 Million for IPO Perk,” the Associated Press, May 14, 2003.
2. Christopher Palmieri, “Media Wildcatter,” Business Week, April 25, 2005, p. 100.
3. Robert Johnson, “Back to College, Still in the Fray,” New York Times, May 22, 2005, sec. 3, p. 2.
4. http://www.level3.com/603.html.
5. Mark Landler and Jenny Anderson, “Credit Suisse Rallies Its U.S. Troops,” International Herald Tribune, February 24, 2005, p. 1.
6. Josée Valcourt, “Health, Record Affect Prison Selection,” Clarion-Ledger, July 14, 2005, p. A4.
7. Federal Bureau of Prisons, “Program Statement on Visiting Regulations,” April 14, 2003.
8. Lisa Stein, “Throwing the Book at a Crooked CEO,” U.S. News and World Report, July 25, 2005, p. 11.
9. David Hayes and Suzanne King, “Sprint Gives Ousted CEO Millions in Severance Deal,” Kansas City Star, June 12, 2003, p. A1.
10. Janet Guyon, “Jack Grubman Is Back: Just Ask Him,” Fortune, May 16, 2005, p. 118.
11. Michael J. Martinez, “Mack Returns to Morgan Stanley as CEO,” the Associated Press, July 1, 2005.
12. Sandy Shore, “SEC Files Charges Against Ex-Qwest CEO,” the Associated Press, March 16, 2005.
13. Al Lewis, “Did Nacchio Pass 4-Way Test? No Way,” Denver Post, March 15, 2005, p. C1.
14. Sandy Shore, “Judge Grants 45-Day Delay in Qwest Evidence Exchange,” the Associated Press, July 27, 2005.
15. http://www.qwest.com/about/company/management/notebaert.html.
16. Robert Gearty, “Quattrone Guilty on All Counts,” New York Daily News, May 4, 2004, p. 65.
17. Walter Hamilton, “Banker’s Appeal Is Heard,” Los Angeles Times, July 13, 2005, p. C3.
18. Erin McClam, “Final WorldCom Ex-Director Settles Suit,” the Associated Press, March 21, 2005.
19. http://newscenter.verizon.com/speeches/bio_ivan.vtml.
20. Samuel Maull, “Ex-Broker Sihpol Is Acquitted on 29 Counts,” the Associated Press, June 9, 2005.
21. Erin McClam, “Five Years in Prison for WorldCom CFO,” the Associated Press, Aug. 12, 2005.
22. Ken Belson, “Ex-Worldcom Executive Forfeits Florida Mansion,” New York Times, July 27, 2005, p. C3.
23. Alexandra Clough, “Mystery Buyer Has $9.7 Million Contract for Deal to Buy Sullivan House,” Palm Beach Post, August 7, 2005, p. 1F.
24. Sandy Shore, “Ex-Qwest CFO Pleads Guilty to Insider Trading Charge,” the Associated Press, July 14, 2005.
25. http://www.telstra.com.au/abouttelstra/investor/docs/sol_trujillo_bio.pdf.
26. Ben White, “Weill to Yield CEO Post, Stay Citigroup Chairman,” Washington Post, July 17, 2003, p. E1.
27. Mitchell Pacelle and Monica Langley, “Weill’s Perks Create Obstacles,” Wall Street Journal, July 20, 2005, p. C1.
28. Matt Miller, “Deal Sense,” Daily Deal, June 13, 2005.
29. http://www.sbc.com/gen/investor-relations? pid=5695.
30. Bruce Meyerson, “Ex-Global Crossing Officers to Settle Suit,” the Associated Press, March 19, 2004.
31. Chris Gaither, Jonathan Peterson, and David Colker, “Founder Escapes Charges in Global Crossing Failure,” Los Angeles Times, Dec. 14, 2004, p. A1.
AFTERWORD
1. CNNMoney, “What Does the Merrill Agreement Mean?” April 22, 2002, http://money.cnn.com/2002/04/20/news/companies/merl/.
2. NASD Rule 2711, July 9, 2002, “Research Analysts and Research Reports.”
3. Assurance of Discontinuance in the Matter of Citigroup Global Markets, April 22, 2003, Exhibit 2, “Undertakings,” p. 14.
4. U.S. Securities and Exchange Commission, 17 CFR Part 242, approved February 20, 2003.
5. Mark Pincus, “Will SEC Ever Make Corporate Insiders Pay for Fraud,” http://markpincus.typepad.com/markpincus/2005/03/will_the_sec_ev_html.