Endpiece: From the Mouths of Brokers

In the Spitzer Files (evidence released with New York attorney general Eliot Spitzer's $1.4 billion settlement with Wall Street), brokers say the darnedest things about Jack Grubman.

In a down market, when people are angry, frustrated or just plain broke, they are at their most vulnerable and — let's face it — their most entertaining. Recently released documents from the New York attorney general's office on the research scandals confirm this fact.

In the course of reporting on the final settlement between the New York attorney general Eliot Spitzer's and some of the Street's most powerful firms, I pored endlessly over pages and pages of evidence released by Spitzer's office at the end of April. When I began, I assumed the documents would be uninteresting correspondence between investment bankers, firm management and research analysts. Instead, I found considerable evidence that rank-and-file brokers — most notably those at Salomon Smith Barney — were as surprised as the general public at the extent of collusion between the research and investment banking arms of their companies. Unlike the general public, however, Smith Barney brokers had a handy way to vent: end-of-year analyst “report cards.” They show great creativity. And some of their remarks are even printable.

Below are selected highlights from the broker report cards for Grubman, made public with the release of the Spitzer documents. Pay special attention to 2000, which contrasts the broker report cards with those submitted by the investment banker group.

1999: Tonight We're Gonna Party Like It's…

The markets were still rising. Clients loved all those glowing reports about the latest and greatest from the worlds of telecom and technology.

“Hope Grubman's bonus is great. He earned it for us all.”

“Jack Grubman is the very best!”

“Jack's the man!”

“The telecom group headed by Jack Grubman is the best team I've had the pleasure to work with in my 25 years in the business.”

2000: Brokers Smell a Rat

The Nasdaq hit the wall in March, fell and couldn't get up. But Grubman continued to push the shares of telecom banking clients — even as their balance sheets began to shred and their shares headed south.

“I will never trust his research again. He has no credibility. They make fun of him on CNBC.”

“Not all four letter words are bad ones. Perhaps some of the analysts, like Grubman, should consider this one: SELL”

“Get rid of the horse's ass Grubman.”

“He has sold his soul to the investment banking arm of the business. Allowing him to represent himself as an analyst is an egregious act by the management of this firm…Shame on him, shame on the banking division, shame on the senior management of this firm.”

2000: Investment Bankers Are Still Partying

Meanwhile, over in the banking side of the house, it was business as usual…

“Jack is clearly a rock star in the securities industry. Jack is a true pleasure with which to work. He is indispensable to SSB's telecom franchise.”

“Jack is viewed as a GOD by company management team and is a primary reason for SSB's telecom effort to remain strong regardless of several key banking departures.”

2001: Brokers Want to See Dead Rats

By now, Smith Barney brokers are getting beat up by customers over mounting losses in telecom shares that, despite massive losses, are still “buys.”

“Shoot Jack Grubman.”

“Grubman is a banking whore.”

“In my 16 years in the retail brokerage business, NEVER have I received such misguided, horrific recommendations from an analyst. Not only has he cost my clients and myself millions in lost asset wealth, but he has exacerbated the difficulties of our business.”

“I cannot convey enough the level of dismay and distress his ‘recommendations’ have caused my clients. I have lost accounts because of him as well as the trust of many of my clients.”

“(Grubman) is a joke. Couldn't you save a few jobs if you let this crook go?”

“I find it hard to believe that he still has a job. I have never known of an analyst to be as consistently wrong as him.”

“There are no words to express how deplorable and sickening his guidance has been.”

“Give us all an early Christmas present: Fire Grubman.”

“Please do not fire Jack. He is my No. 1 indicator — I just do exactly what he says not to.”

It makes for fun reading. If the settlement does what it's intended to do, maybe we'll never see such colorful writing from brokers again. What are the odds?

Writer's BIO: Will Leitch is staff editor of Registered Rep and has never once threatened Jack Grubman's life.

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