NEW YORK (CNN/Money) -
Former Salomon Smith Barney telecommunications analyst Jack Grubman coached former WorldCom CEO Bernard Ebbers on what to tell other analysts in a conference call a year ago, CNNfn confirmed Thursday.
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| Salomon Smith Barney telecom analyst apparently coached WorldCom CEO Ebbers what to say in during a February conference call with other analysts. |
The e-mail Grubman sent Ebbers Feb. 4, 2002, has been seen by the Securities and Exchange Commission and the NASD as part of their probe into conflicts of interests on Wall Street.
The New York Times said WorldCom's former CEO closely followed Grubman's advice on how to deal with growing investor questions about the company.
Grubman told Ebbers to stress liquidity issues, proclaiming the company would have no problems meeting its obligations, its off-balance sheet financing arrangements and the integrity of its accounting practices.
Grubman, who remained bullish on WorldCom stock until near the time of its collapse and delisting, put out a note after the call saying that WorldCom had answered all the key questions in the call.
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The Times said it is not illegal for an analyst to offer advice to a CEO, but the e-mail raises new questions about Grubman's impartiality regarding WorldCom.
Shares of WorldCom, which lost 30 percent of their value in the four trading days leading up to the call, gained 15 percent the day of the call as Ebbers proclaimed the company in good health, even though its earnings release that day came in short of forecasts.
The company filed for bankruptcy protection in July, soon after it admitted that it improperly booked $3.8 billion in expenses over the previous five quarters.
By then Ebbers had been forced to resign in April under pressure, due to questions about the company's fiscal health and loans made to him backed by WorldCom's plunging stock. Grubman resigned from Citigroup unit Salomon Smith Barney in August.
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