Okay he was no Frank Quattrone, but back in the day, Paul Johnson was big cheese in the telecom world, and he could break or make companies, especially those dealing in the fiber optic gear. And now he can be sued. Class action lawyers are licking their chops. This is in addition to a pending SEC investigation. Johnson, however, seems to have been able to avoid the ire of New York Attorney General who wants to be Governor, Eliot Spitzer. (Spitzer went after Jack Grubman with hammer-and-tongs!)
He was an analyst with now defunct and gone firm of Robertson Stephens. His thumbs up could do more for the stock that any amount of profit. Well, except there something stinky about what he was doing – he and several others at Robby Stevens got pre-IPO shares in Corvis and when the company became public, Johnson wrote lots of good things about him. (Like all smart people they formed a private partnership, Bay View Partnerships!) This would have gone on all right had the telecom bubble not burst. And that’s when the shit started to hit the fan. Investors sued, and well you know the rest.
Johnson provided positive research coverage in 1999 and 2000 on Redback Networks Inc. and Sycamore Networks Inc., after they had announced proposed mergers with private companies. Johnson praised both mergers in his research reports and media statements, but failed to disclose that his supposedly objective advice was infected by serious conflicts of interest. In both cases, he owned stock in the private companies that would be exchanged for public company shares if the mergers were completed, creating multimillion-dollar windfalls for Johnson.
Johnson went on to teach at Columbia University Business School. Even though he used not much financial restraint and metrics when pushing schlock like Corvis, ironically he’s going to teach a course in “value investing.” He pushed ONI, but owned $9 million of stock. Okay, so I know there is a reason why some called MBAs, mostly bullshit artists – they are taught to be that way.