NEW YORK, Oct. 28, 2002 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) has filed a class action lawsuit in the United States District Court for the Southern District of New York against Salomon Smith Barney, Inc. ("Salomon") and its former telecommunications research analyst Jack B. Grubman ("Grubman") on behalf of investors who purchased securities, including the 6% Convertible Subordinated Notes due 2009 (the "Notes"), of Level 3 Communications, Inc. (Nasdaq:LVLT) ("Level 3" or the "Company") during the period from January 4, 1999 through June 18, 2001, inclusive (the "Class Period"). The lawsuit charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading analyst reports on Level 3 in a bid to win or maintain lucrative banking and advisory work from the Company.
The complaint alleges that Salomon and Grubman urged investors to purchase Level 3 securities by issuing false and misleading analyst reports rather than providing independent objective analysis. By April 2001, Salomon had received approximately $136 million in investment banking fees from Level 3. As a result of defendants' false and misleading statements, the market price of the Notes was artificially inflated, maintained or stabilized during the Class Period.
On September 30, 2002, New York State Attorney General Eliot Spitzer sued five current and former executives from four different telecommunication companies for repayment of proceeds realized through "profiteering in Initial Public Offerings (IPOs) and phony stock ratings." In addition to allegations of "spinning," the complaint charges that defendants issued favorable but false ratings on existing or potential banking clients, including Level 3, in order to earn lucrative fees involved in underwriting and advisory work.
The complaint details how analysts were pressured to issue positive ratings and avoided the bottom two ratings in Salomon's five category rating system. Salomon employees, especially the retail brokers, allegedly understood the fraud being perpetrated on individual investors and called Grubman a "disgrace" and "investment banking whore."
Similarly, on September 23, 2002, NASD issued a press release announcing that it had fined Salomon $5 million for issuing materially misleading research reports on Winstar Communications, Inc. (Winstar") in 2001 that were neither objective nor independent, but instead were the biased, overly-optimistic and uncritical product of collaboration between defendants and Winstar management. In addition to the specific investigations above, Salomon is also the target of broader investigations by NASD, the Securities and Exchange Commission, the House Financial Services Committee and the New York State Attorney General concerning research practices and analyst conflicts; the allocation of hot initial public stock offerings to banking clients, including WorldCom, Inc. executives; and Grubman's surprise upgrade on AT&T Corp. in November, 1999 after years of bearish reports on the company and only months before Salomon was named one of three top underwriters in the $10 billion spin-off of the company's wireless-phone unit.
If you purchased the securities, including the Notes, of Level 3 during the Class Period, you have until October 29, 2002 to ask the Court to appoint you as lead plaintiff for the Class. To serve as lead plaintiff, you must meet certain legal requirements. If you wish to review a copy of the Complaint, to discuss this action or have any questions, please contact Andrew G. Tolan, Esq. of the Pomerantz firm at 888-476-6529 (or (888) 4-POMLAW), toll free, or at agtolan@pomlaw.com by e-mail. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz firm, which has offices in New York and Chicago, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class action litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.