Salomon's Jack Grubman ResignsAug 15, 2002 | UPI Salomon Smith Barney lead telecom analyst Jack Grubman, who is being investigated by regulators for his role in the rise and fall of WorldCom Inc., resigned Thursday night, effective immediately.
In a letter to Salomon employees, Grubman wrote that the "current climate of criticism has made it impossible to perform my work." He also said his family has been hurt by the criticism.
"The relentless series of negative statements about my work, all of which I believe unfairly single me out, have begun to undermine my efforts to analyze telecommunications companies," Grubman said.
Grubman, one of Wall Street's most highly-paid analysts, came under scrutiny for downgrading the shares of WorldCom to a sell rating just a day before the company announced almost $4 billion in accounting irregularities.
Since the Clinton, Miss., -based company's initial disclosure, WorldCom has announced additional accounting errors, which now total more than $7 billion.
He was well known for maintaining his bullish views on the telecom sector, even months after the prospects of many companies on his list were battered by a spending slowdown that still shows signs of letting up.
Other failed companies Grubman touted included Global Grossing Ltd. and Winstar Communications Inc., which collapsed under mountains of debt and cost investors billions of dollars despite his "buy" recommendations.
"While I regret that I, like many others, failed to predict the collapse of the telecommunications sector and I understand the disappointment and anger felt by investors as a result of that collapse, I am nevertheless proud of the work I and the analysts who work with me did," Grubman wrote in a resignation letter to the head of the firm's corporate and investment bank.
He also said, "I did my work as an analyst within a widely understood framework consistent with industry practice that is now being extensively second-guessed."