Worldcom analyst goes with $32m settlement
The Wall Street analyst at the centre of the government investigation into the Worldcom accounting scandal resigned today with a $32m settlement.
According to the Financial Times, Jack Grubman, the Salomon Smith Barney telecommunications analyst who had a close relationship with the embattled telecoms giant, will leave the firm with a $32m separation agreement.
Last month, WorldCom filed for the largest bankruptcy in US history after admitting to a $7.2bn accounting fraud. Under a pact reached between Citigroup and his lawyers, Mr Grubman will be paid $1.2m over the next year and a half, the FT reported.
In addition, Citigroup will forgive a five-year loan it made to Mr Grubman in 1998 – worth $19m including interest – and cash out his options, paying him $12m, the FT said.
Michael Carpenter, who heads Salomon Smith Barney, said in a memo: ‘Jack and I agree that recent events have made it difficult for him, both personally and professionally, to stay in a job and industry that we know are important to him.’
Mr Grubman said in a letter to Mr Carpenter: ‘I did my work as an analyst within a widely understood framework consistent with industry practice that is now being extensively second-guessed.’
Mr Grubman admitted in recent congressional hearings that he had attended three board meetings at WorldCom over the years to advise the company’s directors on banking transactions that Salomon was pitching, the FT wrote.