Oct 1, 2002 : NY State Sues Telecom Execs Over IPOs

📅 October 1, 2002 - Following a similar move by US securities regulators, the state of New York is reportedly suing WorldCom founder Bernard Ebbers, along with four other telcom executives, to recover millions in alleged ill-gotten gains.

The civil suit filed on Monday alleges that Citigroup Inc.'s Salomon Smith Barney Inc. essentially bought investment banking business from executives at WorldCom, Qwest Communications International Inc. and other companies with IPO shares.
New York Attorney-General Eliot Spitzer says the lawsuit is part of a new campaign to force corporate executives pay back improper gains.
In addition to Ebbers, the suit names Qwest director Philip Anschutz, former Qwest chairman Joseph Naccio, Metromedia Fiber Network chairman Stephen Garofalo and former CEO of McLeodUSA Clark McLeod.
The suit alleges that former Saloman telecommunications analyst Jack Grubman wrote inaccurate reports on current and prospective investment banking clients. In exchange, the executives were given privileged access to hot IPOs underwritten by Salomon. The executives also allegedly profited from selling shares in their own companies when the overly optimistic reports sent stocks soaring.
Grubman's lawyer reportedly said on Monday that the allegations against his client are false, claiming that he did not have responsibility for or influence on initial public offering allocations to telecommunications executives.

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