YOU ARE AT:Archived ArticlesFormer Smith Barney analyst reaches settlement over Winstar research

Former Smith Barney analyst reaches settlement over Winstar research

Financial regulatory services provider NASD announced Christine Gochuico, former vice president and telecommunications research analyst for Salomon Smith Barney Inc., has settled charges related to misleading research of broadband services provider Winstar Communications Inc.

Gochuico will pay a $100,000 fine and be suspended from associating with any NASD-member companies for six months. For an additional 18 months, Gochuico is prohibited from allowing her name to appear on or be associated with any NASD-member company’s research report, advertisement or sales literature.

The complaints against Gochuico alleged that between January and April 2001 she assisted Jack Grubman, managing director of SSB’s equity research department, in drafting research reports containing misleading statements and omissions and including an unreasonable price target for the company.

Gochuico was also charged with publishing reports in favor of Winstar while privately expressing doubts and discussing risks, as evidenced in company e-mails and other documents. In addition, she was charged with violating NASD rules that require conduct to be consistent with “just and equitable principles of trade and high standards of commercial honor and NASD’s advertising rule that prohibits misleading statements and exaggerated and unwarranted statements.”

From January to April 2001, SSB’s reports repeatedly recommended purchasing Winstar stock and assigned it a “Buy” rating and a target price of $50 per share. Meanwhile, the stock fell more than 99 percent, from $20 per share to 14 cents per share, leading Winstar to file bankruptcy in April 2001.

From February 1999 through July 2001, SSB had an investment-banking relationship with Winstar under which it served as lead manager, joint manager or advisor on 10 Winstar equity, bond and financing transactions valued at more than $5.6 billion. SSB received $24 million for its services.

Grubman and SSB previously settled the case against them.


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