This just in: Jack Grubman, the embattled telecom analyst at Salomon Smith Barney, ceased coverage of WorldCom Inc. (OTC: WCOEQ) today, according to Wall Street sources.

Salomon Smith Barney confirmed that Grubman has discontinued his WorldCom coverage today. But a spokesperson declined to send over any particular research, saying, "This is proprietary research that is distributed to clients."

Now that WorldCom is in Chapter 11 bankruptcy proceedings, its shares have been delisted from the major stock exchanges and now trade on the Over the Counter (OTC) exchanges, also known as "pink sheets".

Grubman has been under the government's microscope in recent months because he was particularly bullish on WorldCom through the years, and Salomon has admitted to strong ties to the company. During the time Grubman had a Buy issued on WorldCom, its shares fell more than 90 percent. On April 22, Grubman backed off his bullish stance on the company for the first time, lowering his rating from Buy to Neutral (see WorldCom Finger-Pointing Begins ).

In recent testimony before the Financial Services Committee in the U.S. House of Representatives, Grubman was grilled about his company's investment banking business with WorldCom. In that congressional testimony, Grubman acknowledged that WorldCom generated nearly $80 million in fees to Salomon Smith Barney’s investment banking division from 1998 to 2001 (see WorldCom's Grubby Secrets).

Grubman also admitted that his compensation was indirectly influenced by investment banking deals that his company won. He referred to his "close working relationship" with WorldCom founder and former CEO Bernard J. Ebbers and admitted that he had attended three WorldCom board meetings, in which he served as an advisor for deals between Salomon's investment banking arm and WorldCom. Despite all these connections, Grubman continued to assert his independence and objectivity.

— R. Scott Raynovich, US Editor, Light Reading
http://www.lightreading.com