Spitzer Eyes Analyst Notes

New York Atty. Gen. Eliot Spitzer said Wednesday that his office will investigate analyst commentary on WorldCom Inc., which had a “buy” rating from star telecom analyst Jack Grubman at Citigroup Inc.’s Salomon Smith Barney from 1997 through this April.

Just Monday, with the stock down more than 90% from December, Grubman cut his rating to “under-perform” from “neutral.”

“It did catch many people’s eye that he finally issued a downgrade,” Spitzer said.

His office, which in April stunned Wall Street with allegations of tainted research advice at Merrill Lynch & Co., already has been investigating Grubman, people familiar with the situation said.

Salomon advised WorldCom on its $44-billion purchase of MCI Communications Corp. in 1998 and co-managed its $11.9-billion bond sale last year, the biggest by a U.S. company.