Broker Wins Defamation Suit Over WorldCom Case

Former Salomon Smith Barney Inc. broker Philip Spartis won a $1-million defamation verdict against a lawyer who claimed Spartis conspired with former analyst Jack Grubman in biased recommendations of WorldCom Inc. stock.

A Phoenix jury decided, 7 to 2, that the lawyer, Stuart Goldberg, defamed Spartis on a website that claimed Spartis committed fraud while running a “boiler shop” in the Atlanta branch of Salomon, a unit of Citigroup Inc.

“There was nothing in the website that was truthful, at least to the degree that it dealt with Phil,” Jeffrey Liddle, Spartis’ lawyer, said Tuesday.

Spartis, who provided information to regulators about improper brokerage practices, faces a disciplinary proceeding filed by the New York Stock Exchange’s enforcement division, based on false claims posted on Goldberg’s website, Liddle said. Spartis administered several employee stock option plans, including WorldCom’s. He has been sued by former WorldCom employees who lost money on the company’s stock. He denies wrongdoing in those cases.

The jury deliberated four hours Feb. 17 before announcing its verdict. Its decision was filed last week, court records show. Lawyers for both men say there will be no appeal because they expect to work out a confidential post-trial settlement.

In the 2003 suit, Spartis claimed that Goldberg posted a 107-page “Special Study” and a two-page document titled “The Grubman Circle” on an Internet site. The documents falsely tied Spartis to biased research issued by Grubman, the complaint said.

WorldCom lost more than $180 billion in market value before filing the biggest bankruptcy case in history in July 2002. Grubman was fined $15 million and banned for life from the securities industry for issuing biased stock recommendations.