Former Smith Barney broker Phil Spartis, who was responsible for overseeing the options exercise program for WorldCom employees, has been cleared of a charge brought against him by the New York Stock Exchange for failure to cooperate with the exchange. The former broker, who was fired by Smith Barney in February 2002, had been charged with failing to cooperate with an investigation into the practices at one of Smith Barney’s Atlanta branches where Spartis worked. This does not clear Spartis, however, of other regulatory charges brought against him by the exchange, which are pending. Spartis has also been charged with unsuitability, sending communications to customers without prior approval and sending misleading communications to clients. Similar charges related to the exercise of WorldCom options, handled by Smith Barney, were brought against the firm and one of its branch managers. Smith Barney settled with the NYSE for a fine of $1 million in early September. In this particular case, however, Spartis testified to the NYSE about WorldCom for a couple of sessions in May 2002, when, at the time, he had not been charged by the NYSE. When Spartis returned in December, however, he was informed that he was indeed a subject of the investigation--after being previously told he was not a subject. This surprised his attorneys. Through his attorney, Jeffrey Liddle of Liddle & Robinson, he asked for some type of concessions in exchange for his testimony, and testimony was put off. Spartis was eventually charged with failing to cooperate with the investigation. However, he finished his testimony in May, and the ruling, according to a copy of the decision, shows that the hearing board believed that since Spartis’ status changed during the course of his testimony--without his knowledge, and only after his attorneys raised this question--he should be cleared of this charge. A NYSE spokesman said that the exchange could not comment because of the other pending charges against Spartis.
