[WSJ] NYSE Inquiry of Merrill Broker Focuse…

The Wall Street Journal(March 6, 2002)
NYSE Inquiry of Merrill Broker
Focuses on Global Crossing Stock
By Craig Karmin

NEW YORK- The New York Stock Exchange has launched an investigation into whether Merrill Lynch & Co. broker Susan Brody, the sister of Global Crossing Ltd. Chairman Gary Winnick, used her connections with Mr. Winnick to pitch Global shares to investors.
According to people familiar with the matter, the NYSE probe comes in response to an arbitration claim filed with the exchange by Florence Platzer, one of Ms. Brody’s clients who, with another family member, invested more than $672,000 in Global Crossing and one of its affiliates. Ms. Platzer’s claim accuses Ms. Brody of a conflict of interest in promoting shares of Global Crossing while playing up the connection with her brother. The allegations against Ms. Brody were the subject of an article in the Wall Street Journal last month.
An NYSE spokesman declined to comment, saying the exchange doesn’t discuss investigations. If the NYSE decides some action is appropriate, its options range from censuring or fining brokers deemed to have acted improperly, to, in the most extreme cases, suspending or even barring them from dealing in NYSE stocks.
Ms. Brody couldn’t be reached. Joe Cohen, a Merrill Lynch spokesman, said the company doesn’t comment on regulatory inquires, “except to say that we fully cooperate.” However, Mr. Cohen said Merrill believes the allegations against Ms. Brody “are completely unfounded and we intend to vigorously defend against them. It is unfair to disparage Ms. Brody because of her brother’s involvement in a company that was part of the recent telecom-tech stock retreat.”
Ms. Platzer, 67 years old, from Hauppauge, N.Y., and another family member say they lost more than $122,000 of their investment in Global Crossing and Asia Global Crossing. Shares in Global Crossing, which climbed above $61 at its peak in February 2000, now trade as a penny stock. Global filed for Chapter 11 protection in a New York federal bankruptcy court in January.
In the claim, Ms. Platzer says that Ms. Brody indicated that Mr. Winnick had called on his sister to help him sell hundreds of thousands of shares in Asia Global Crossing shortly after the unit’s initial public offering.
Mr. Winnick, through a spokesman, said he never had this conversation with his sister. “At no time did Mr. Winnick urge or push his sister to sell shares in Asia Global Crossing,” the spokesman for Mr. Winnick said.
A Global Crossing spokeswoman declined to comment.
Ms. Platzer claims that Ms. Brody frequently boasted of her brother’s political and social connections in an effort to paint a bullish picture of Global Crossing and Asia Global Crossing.