XO hit with shareholder lawsuit

NEW YORK-The law firm of Stull, Stull & Brody has lodged a shareholder class-action lawsuit against XO Communications Inc., Salomon Smith Barney and its former research analyst Jack Grubman.

The complaint alleges that Salomon’s and Grubman’s recommendation to buy XO stock lacked “rational economic basis” and was motivated by a desire to gain underwriting business.

The suit was filed in the U.S. District Court for the Southern District of New York, where XO, a wireless broadband carrier based in Reston, Va., had filed for bankruptcy protection in June.

In a statement, the investment bank said, “We believe this suit is without merit.”