News Release

NASD Fines, Suspends Former SSB Research Analyst Christine Gochuico For Misleading Reports On Winstar

Washington, D.C.—NASD announced today that Christine Gochuico, a former vice president and telecommunications research analyst for Salomon Smith Barney, Inc. (SSB), settled charges relating to misleading research by agreeing to a $100,000 fine and a six-month suspension from the securities industry. For an additional 18 months following her suspension, Gochuico is prohibited from allowing her name to appear on, or otherwise be publicly associated with, any broker-dealer's research report, advertisement or sales literature.

The sanctions imposed today stem from a September 2002 NASD complaint filed against SSB, Gochuico and Jack Grubman, formerly Managing Director of SSB's Equity Research Department. Charges in the complaint related to the firm's issuance of misleading research reports on Winstar Communications, Inc -- a company with which SSB had a significant investment banking relationship. (See NASD News Release - 09/23/02) SSB settled the case when it was first filed while Grubman settled at a later date. (See NASD News Release - 04/28/03).

NASD charged that between January and April 2001, Gochuico assisted Jack Grubman in analyzing Winstar and drafting research reports that contained misleading statements and omissions and an unreasonable price target for the company. During that time period, Salomon's research reports recommended a purchase of Winstar with a "Buy" rating and a target price of $50 per share -- while the price of Winstar fell more than 99 percent, from approximately $20 per share to $0.14 per share. Gochuico's conduct violated NASD's advertising rules, which require that, among other things, published research reports have a reasonable basis, present a fair picture of the investment risks and benefits, and not make exaggerated or unwarranted claims.

NASD also charged that Gochuico assisted in publishing research reports that recommended Winstar at the same time that she was privately expressing doubts and discussing risks about the company. On Feb. 28, 2001, when Winstar was trading at approximately $13 per share, an institutional investor sent the following e-mail to Gochuico, questioning the use of certain assumptions in Winstar's discounted cash flow model:

"Why do you guys use 12% perpetual FCF [free cash flow] growth for your terminal multiple?? Seems a little high to me, especially considering that the US and World economy has at best 3% LT [long term] sustainable growth rate . . . ."

Gochuico immediately replied:

"There really is no good reason - except the unwillingness to change our Target Price for optics; although I would admit $50 per share is shall we say - extremely aggressive."

Gochuico violated the NASD rule which requires that conduct 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. Gochuico agreed to the settlement without admitting or denying the allegations.

Investors can obtain more information about, and the disciplinary record of, any NASD-registered broker or brokerage firm by contacting NASD's BrokerCheck. NASD makes available BrokerCheck at no charge to the public. Investors can link directly to the program by going online to Investors can also access this service by calling 1-800-289-9999.

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