Salomon Smith Barney Fined $1 Million Over WorldCom

The NYSE fined Salomon Smith Barney $1 million for failing to supervise its brokers who handled the stock option plans of Worldcom employees.

Salomon brokers often discouraged employees from exercising their options and then selling their stock to pay taxes. Instead, Salomon brokers promoted holding the stock, and paying the taxes with Salomon margin loans. When Worldcom stock tanked, employees were left with large losses and large, unpaid tax bills.

Source: Wall Street Journal, August 22, 2003