UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

ADELE SELINGER, On Behalf of Herself Civil Action No. and All Others Similarly Situated,

Plaintiff, PLAINTIFF'S CLASS ACTION vs. COMPLAINT FOR VIOLATIONS OF THE SECURITIES LAWS C. MICHAEL ARMSTRONG, AT&T CORPORATION, GOLDMAN, SACHS & CO., MERRILL LYNCH & CO., and SALOMON SMITH BARNEY,

Defendants.

COMPLAINT

Plaintiff, by and through her attorneys, alleges the following Complaint based upon the investigation of counsel, except as to those allegations concerning plaintiff, which are alleged upon personal knowledge.

Counsel's investigation included: (a) review and analysis of public filings made by AT & T Corp. ("AT&T" or the "Company") with the Securities and Exchange Commission (the "SEC"); (b) review and analysis of securities analysts' reports concerning AT&T and AT&T Wireless Group Tracking (the "Tracking

Stock"); (c) review and analysis of press releases and other publications disseminated by defendants; and

(d) other publicly available information about AT&T and the Tracking Stock.

1. This action is brought as a class action on behalf of all persons who purchased the Tracking

Stock from April 26, 2000 through and including May 2, 2000 (the "Class Period") pursuant to a

Registration Statement and a Prospectus attached thereto filed with the SEC on or about April 27, 2000.

Plaintiff's claims arise under Section 11 of the Securities Act of 1933 ("the Securities Act"), which provides a remedy for damages caused by the misstatement or omission of material facts in a Registration Statement and Prospectus. None of the defendants is charged with fraud, but rather with negligence and lack of due diligence or, in the case of the issuer, with strict liability as provided by Section 11 of the Securities Act.

JURISDICTION AND VENUE

2. This Court has jurisdiction over the subject matter of this action pursuant to Section 13 of the Securities Act, 15 U.S.C. § 77m and pursuant to 28 U.S.C. § 1331. The claims asserted herein arise under and pursuant to Section 11 of the 1933 Act and present federal questions.

3. Venue is proper in this judicial District pursuant to Section 22 of the Securities Act and pursuant to 28 U.S.C. § 1391(b). At all times relevant to the complaint, the Company maintained executive offices in this judicial District, and in Basking Ridge, New Jersey, and the three underwriter defendants maintain their principal executive offices in this District. In addition, a substantial number of the challenged statements complained of were prepared and disseminated to the investing public from offices within this District.

4. In connection with the violations of law alleged herein, the defendants used the means and instrumentalities of interstate commerce including the United States mails, interstate wire and telephone facilities, the facilities of the national securities markets and the Internet to distribute the false and misleading statements complained of herein.

PARTIES

5. Plaintiff purchased shares of the Tracking Stock on April 26, 2000 and retains those shares, as set forth on the attached Certification.

--2- 2 - 6. AT&T and its subsidiaries furnish domestic and international distance, regional, local and wireless communications services, cable television and Internet communications services. AT&T also provides billing, directory and calling card services to support its communications business. AT&T's primary lines of business are business services, consumer services, broadband services and wireless services. In addition, AT&T's other lines of business include network management and professional services through AT&T Solutions and international operations and ventures. In June 2000, AT&T completed the acquisition of MediaOne Group. With the addition of MediaOne's 5 million cable subscribers, AT&T became the country's largest cable operator, with about 16 million customers.

7. Defendant C. Michael Armstrong ("Armstrong") has, at all material times, been a Director of the Company, the Company's Chairman of the Board, and Chief Executive Officer. Defendant

Armstrong personally prepared and disseminated many of the challenged statements complained of herein, and signed the Registration Statement and Prospectus (hereinafter collectively referred to as "the

Prospectus") dated April 27, 2000. The 360 million share initial ("IPO") pursuant to that

Prospectus raised $10.3 billion for the use of AT&T and AT&T Wireless Group, the largest public offering in U.S. history. Each share was sold in the offering at $29.50 per share.

8. Defendants Goldman, Sachs & Co., Merrill Lynch & Co. and Salomon Smith Barney

("The Lead Underwriter Defendants") served as the co-managing underwriters of the Tracking Stock IPO.

The Lead Underwriter Defendants are named as class representatives under Fed. R. Civ. P. 23 of a defendant class consisting of all 105 securities broker/dealers who made up the underwriting syndicate for the .

--3- 3 - BACKGROUND

9. Since 1997, defendant AT&T has carried out an aggressive expansion and diversification plan under the direction of its CEO, defendant C. Michael Armstrong. Given their ability to generate cash flow, the continued growth and vitality of the Company's business services and long-distance accounts was central to its ability to successfully carry out its complex and costly expansion plans.

10. One of AT&T's key business units was its wireless telephony unit, whose business operations are collectively known as the "AT&T Wireless Group" (the "Wireless Group"). By the end of

1999, the wireless operations were among the largest in the country, doing business in 42 of the top 50 markets and encompassing over 12 million total subscribers. For 1999, revenues reached $7.2 billion, while net losses totaled over $400 million. Because of heavy capital expenditures, the Company also had negative net cash flow of approximately $1.5 billion. During the year 2000 and beyond, the Wireless

Group needed to raise many billions of dollars in capital in order to expand the network geographically, to build further infrastructure, to make acquisitions, and to upgrade technology. In order to do this, the

Wireless Group was reliant on AT&T. Thus AT&T's overall financial health was important to the Wireless

Group's ability to raise funds and to grow. Any indication that AT&T was faltering would make reluctant to invest heavily in either AT&T or the Wireless Group, and would materially affect the terms on which AT&T or its divisions could raise funds.

11. On December 6, 1999, the Company issued releases and held an analysts' conference in

New York City. One release formally announced that AT&T would seek shareholder approval for the creation of a new class of AT&T --AT&T wireless tracking stock--as part of an IPO of that stock. AT&T also issued a release stating that the company's strategic investments in data, Internet and

--4- 4 - AT&T solutions, and that other management actions "will assure that we're translating those investment into customer value with increased speed, clarity and innovation."

12. On December 6, 1999, AT&T held its largest analysts' meeting in history – an all-day presentation by AT&T executives at the Waldorf Astoria to some 800 analysts. AT&T's presentation was very upbeat and bullish. AT&T stressed that Concert – AT&T's joint venture for worldwide long-distance business service - had been successfully launched and that, as a result of a successful reorganization and re-staffing of AT&T's Business Services long-distance operations, AT&T was now forecasting its Business

Services revenue growth would accelerate to 9%-11% during 2000 - compared to 7% in 1999. At the conference, AT&T stated to the same 800 analysts that:

! AT&T was continuing to cut costs and was eliminating 25% of its executives as part of saving an additional $2 billion in costs.

! AT&T had made very good progress with its Concert global joint venture with British Telecom.

! AT&T had realigned the units in its Business Services that marketed long-distance and data transmission services to corporate accounts to help speed revenue growth.

! AT&T's revenue growth was accelerating.

! AT&T's Business Services revenues would grow 9%-11% during 2000.

! AT&T expected total revenue growth in 2000 to accelerate to 8%-9%.

13. The financial press reported the December 6, 1999 analysts' conference in a very positive manner. On December 7, 1999, The Wall Street Journal reported:

AT&T Corp. Chairman C. Michael Armstrong talked up the phone company's prospectus in a daylong session with analysts, promising strong revenue growth . . . .

--5- 5 - Mr. Armstrong told analysts he remains confident of AT&T's ability to increase its growth rate despite the long-awaited entry of the regional Bell companies into the long- distance market.

14. The January 10, 2000 edition of Fortune, published in late December 1999, detailed

AT&T's extremely bullish December 6, 1999 analysts' conference:

Mike Armstrong's been winning over Wall Street with a good-news offensive . . . .

On Dec. 6, AT&T chief Michael Armstrong stood before 800 telecom analysts in New York's Waldorf Astoria ballroom and put the crowning touch on his months-long campaign to revive the company's sagging stock price. AT&T, said Armstrong, would indeed create a tracking stock for its hot wireless-phone business, raising several billion dollars through an initial public offering . . . .

15. On January 7, 2000, AT&T filed a Registration Statement for the AT&T Wireless tracking stock offering. In January 2000, AT&T set March 14, 2000 for a meeting of AT&T common shareholders to vote on amendments to AT&T's charter to create the AT&T Wireless tracking stock.

16. On January 25, 2000, AT&T reported its fourth quarter 1999 and year end 1999 results.

Over the next few days, its top executives had a conference call and other communications with major securities analysts. In these communications, AT&T's top executives reaffirmed the representations and forecasts they had made at the December 6, 1999 analysts' conference.

17. On January 26, 2000, Prudential issued a report on AT&T which was based on and repeated information provided at the January 25, 2000 conference call and in follow-up discussions with

AT&T executives and stated:

With the closure of Concert, the planned IPO of AT&T's wireless business and the expected close of the MediaOne merger this spring, we believe the pieces are all falling in place for an upward move in AT&T's stock price.

--6- 6 - The April 26, 2000 IPO Of The Tracking Stock

18. During the first three weeks of April 2000, AT&T's top executives went on an extensive

"Roadshow" to create enthusiasm for and interest in the IPO of AT&T's Wireless tracking stock.

19. Due to AT&T's financial and accounting controls and reporting systems, AT&T knows its quarterly results shortly after the end of each quarter. Thus, even though AT&T's first quarter 2000 results were known to AT&T's top executives by the date of the IPO, April 27, 2000, AT&T's top executives delayed the release of these results to conceal AT&T's poor first quarter 2000 results and the adverse information which they knew would accompany those first quarter 2000 results so that AT&T could complete the important Wireless tracking stock IPO before this negative information became public.

20. While delaying the release of AT&T's first quarter results, defendants, on April 24, 2000, pre-released the mostly favorable first quarter results of the AT&T Wireless Group.

21. On April 26, 2000, AT&T successfully completed the IPO of its Wireless tracking stock

– selling 360 million shares at $29.50 per share, raising $10.6 billion in needed capital for AT&T and its

Wireless business.

22. At the time of the IPO, AT&T's lack of experienced account representatives and sales personnel caused AT&T's important large corporate customers to be neglected and poorly served. Many large international corporate customers told AT&T prior to the IPO that they would abandon or were abandoning AT&T's long-distance (voice and data transmission) business. These problems were exacerbated by AT&T's loss during 1999 of two large U.S. government long-distance contracts (the FTS

2000 contracts) and a huge ($650 million per year) BP Amoco PLC contract.

--7- 7 - 23. On May 2, 2000, AT&T finally released its disappointing first quarter results. AT&T shocked investors by revealing that due to the serious problems in AT&T's business long-distance voice and data transmission operation – and its Concert joint venture – several significant corporate long-distance customers had indicated they were going to terminate or had terminated their long-distance service with

AT&T. This, combined with the huge amounts of lost revenues due to the lost FTS 2000 and BP Amoco contracts, meant that AT&T's vitally important core business long-distance voice and data transmission operations would not achieve the growth that had been forecast by AT&T. In fact, prior to the IPO, the truth was that the growth in AT&T's core business long-distance operations had been slowing dramatically, a situation exacerbated by the reorganization and realignment of AT&T's business long distance operations in October 1999 through November 1999, together with the adverse revenue impact of AT&T's loss of the huge FTS 2000 and BP Amoco long-distance contracts earlier in 1999.

24. Analysts and investors reacted to this news and AT&T's stock fell from $48-13/16 on May

1, 2000 to $41-1/8 on May 2, 2000 and to $35-1/2 on May 11, 2000. Analysts cut the AT&T 2000 forecast to just $1.65-$1.75 from the $2.10-$2.15 forecast during the Class Period and

Standard & Poor's put AT&T on its "credit watch," with "negative implications."

25. Following AT&T's surprise announcement, purchasers of the Tracking Stock expressed a belief that they had been misled. The Evening Standard of London reported on May 2:

The limits of America's much-admired disclosure laws came into full view yesterday when AT&T startled Wall Street with some very discouraging earnings and a bearish forecast for the year ahead.

Less than a week after pocketing $10.8 billion . . . in the largest initial public offering in U.S. history, the giant telecommunications company said it would not hit 2000 earnings targets made by the

--8- 8 - same Wall Street brokers who a few days ago were touting the spin- off, AT&T Wireless.

Several of those analysts are now furious, questioning the timing of the warning, which, if made earlier, could have adversely affected the IPO, even though the profit problems are in other operations.

Global investors, including many here, were active buyers of AT&T Wireless shares and are justifiably miffed that something so material to the well-being of the parent company was not revealed before a big part was sold to the public.

26. Similarly, The Dallas Morning News, on May 3, 2000 quoted Jana Harris, an analyst for a major pension fund as stating: "I wonder why they didn't make us aware of the problems they were having before now. My strong gut feeling is that they wanted the wireless offering to go off well. A lot of people feel misguided or somewhat deceived."

The Misstatements and Omissions in the Prospectus

27. The Prospectus failed to disclose AT&T's first quarter financial results and the other adverse information relating to AT&T's business decline that are detailed above, all of which information

AT&T and the other defendants should have known through the exercise of appropriate due diligence. The prospectus detailed a number of risk factors, none of which are germane to this action. Moreover, the

Prospectus made clear that AT&T's business condition was highly material to Wireless Tracking Stock investors:

Holders of AT&T common stock, AT&T Wireless Group tracking stock and Group tracking stock will all be common shareholders of AT&T, and will be subject to risks associated with an investment in a single company and all of AT&T's businesses, assets and liabilities. Financial effects arising from one group that affect AT&T's consolidated results of operations or financial condition could, if significant, affect the combined results of operations or financial of the other groups or the market price of the class of common shares relating to the other groups. In

--9- 9 - addition, if AT&T or any of its subsidiaries were to incur significant indebtedness on behalf of a group, including indebtedness incurred or assumed in connection with an acquisition or investment, it could affect the credit rating of AT&T and its subsidiaries. This, in turn, could increase the borrowing costs of the other groups and AT&T as a whole. Net losses of any group and or distributions on shares of any class of common or will reduce the funds of AT&T legally available for payment of future dividends on each of the AT&T common stock, AT&T Wireless Group tracking stock and Liberty Media Group tracking stock. For these reasons, you should read AT&T's consolidated financial information together with the financial information of the AT&T Common Stock Group, the AT&T Wireless Group and the Liberty Media Group.

[Prospectus, p. 12]

28. Further indicative of the fact that AT&T's top executives had the financial results of AT&T's first quarter of 2000 by the time of the April 26, 2000 IPO is AT&T's past course of conduct with regard to the issuance of quarterly results. The Tracking Stock IPO occurred on the 27th day after the close of

AT&T's first quarter. In the eight quarters prior to the May 2, 2000 release, AT&T had released its quarterly results on or before the 27th day after the close of the quarter in seven of the eight quarters.

More importantly, as noted above, on April 24, 2000 – three days prior to the IPO – AT&T selectively disclosed the first quarter results of the AT&T Wireless Group.

29. Despite the shock to the AT&T common shares from the May 2 announcement, the price of the Wireless Tracking Stock did not immediately collapse below the offering price due to efforts by members of the underwriting syndicate to artificially prop up the shares. Many of the syndicate members had threatened brokers with loss of all or part of their commission if their clients sold too early – an industry practice sometimes referred to as a "penalty bid." Moreover, Goldman Sachs, the first lead underwriter, made extraordinary efforts to artificially support the Tracking Stock price with its own funds. The New

--10- 10 - York Times reported this effort to keep the Tracking Stock from falling to its true value on May 10, 2000 under the headline, "AT&T Wireless Stock Treading Water (With a Little Help)":

The nearly flat line on the wireless unit's stock chart resulted from a show of support from the investment banks that underwrote the $10.6 billion offering. In general, it is considered bad form on Wall Street to allow a client's first time stock offering to quickly fall below its offering price without putting up a fight. But traders say it is not clear how much longer the price of AT&T wireless will hold steady because there are no concrete rules on how far underwriters must go in providing support against selling pressure. In after-hours trading, the stock fell to $29.

Traders at a few big investment banks said that Goldman Sachs & Co., one of the three lead underwriters, was buying a lot of stock back at the offering price yesterday on behalf of the syndicate underwriters . . . .

But traders and investment bankers at other firms said Goldman clearly felt obligated to prop up the stock because it was such a lucrative, high profile deal and because AT&T wields such influence on Wall Street. A lesser deal that had performed early on as AT&T Wireless has done probably would not have received as much support, they said.

[Emphasis supplied].

30. The efforts by the underwriting syndicate to artificially support the shares at prices above fair value could not continue indefinitely, however, and when such efforts diminished, the stock began to drop. The New York Times article, referenced in the immediately preceding paragraph, quoted a

"manager of a large mutual fund" as indicating that, without the extraordinary efforts by the underwriters to inflate and prop up the stock prices, the stock would fall to a true value of $25-$27 per share. By May

22, 2000, the price had settled to the bottom of this range, and by the time of the filing of this lawsuit, the price had decreased to the low $20 range.

--11- 11 - STATUTORY SAFE HARBOR

31. The statutory safe harbor provided for forward-looking statement ("FLS") does not apply here as the statements challenged in the Prospectus were not forward-looking.

PLAINTIFF CLASS ACTION ALLEGATIONS

32. This is a class action on behalf of purchasers of AT&T Wireless Tracking Stock between

April 26, 2000 and May 2, 2000 (the "Class Period"), excluding defendants (the "Class"). Class members are so numerous that joinder of them is impracticable.

33. Common questions of law and fact predominate and include whether defendants: (i) violated the 1933 Act; (ii) omitted and/or misrepresented material facts; (iii) negligently issued misleading statements or did so without engaging in proper due diligence; and (iv) the extent of and appropriate measure of damages.

34. Plaintiff's claims are typical of those of the Class. Prosecution of individual actions would create a risk of inconsistent adjudications. Plaintiff will adequately protect the interests of the Class. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

DEFENDANT CLASS ALLEGATIONS

35. This action is brought against the Lead Underwriter Defendants as a defendant class action, with these three defendants to serve as representatives of a class consisting of all 105 broker/dealers who were part of the IPO underwriting syndicate (the "Underwriter Class.") Underwriter Class members are so numerous that joinder of them is impracticable.

36. Common questions of law and fact predominate and include whether the Underwriter

Defendants: (i) violated the 1933 Act; (ii) omitted and/or misrepresented material facts; (iii) negligently

--12- 12 - issued misleading statements or did so without engaging in proper due diligence; and (iv) the extent of and appropriate measure of damages. The class members relied upon the three Lead Underwriter Defendants to perform due diligence for them, to prepare a Registration Statement and Prospectus with the Company, and to vouchsafe its accuracy on behalf of the class members as their designees and/or agents.

37. The defenses to be asserted by the defendant class representatives are typical of those of the Class. Defense of individual actions by each individual underwriter in a variety of jurisdictions would create a risk of inconsistent adjudications. The Lead Underwriter Defendants will adequately protect the interests of the Defendant Class. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.

CLAIM FOR RELIEF

38. All defendants violated § 11 of the Securities Act:

(a) As to the Lead Underwriter Defendants and defendant Armstrong, and with respect to the Prospectus, making untrue statements of material facts and omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading negligently or without having conducted proper due diligence; and

(b) As to defendant AT&T, and with respect to the Prospectus, making untrue statements of material facts and omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, for which omissions and misrepresentations AT&T is strictly liable, negligently or without having conducted proper due diligence.

(c) By reason of defendants' acts and omissions to act, Class members were damaged.

--13- 13 - (d) The undisclosed adverse information is the type of information which, because of

SEC regulations, regulations of the national and customary business practice, is expected by investors and securities analysts to be disclosed and is known by corporate officials and their legal and financial advisors to be the type of information which is expected to be and must be disclosed.

(e) Had all facts been adequately disclosed, plaintiff and the Class would not have purchased the Tracking Stock at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by defendants' misleading statements.

(f) None of the defendants herein is alleged to have committed any intentional fraud, and no allegation herein should be construed as the making of such an allegation.

39. Defendant Armstrong also violated § 15 of the Securities Act:

(a) Defendant Armstrong, by reason of his position and/or as the owner, directly and/or indirectly, of shares of AT&T's common stock, had the power and authority to cause AT&T to engage in the wrongful conduct complained of herein. As a result, at the time of the wrongs alleged herein, defendant Armstrong was a "controlling person" of AT&T within the meaning of Section 15 of the

Securities Act.

(b) Defendant Armstrong participated in the issuance of the misstatements and omissions contained in the Prospectus. Pursuant to Section 15(a) of the Securities Act, by reason of the foregoing, defendant Armstrong is liable for AT&T's aforesaid violations of Section 11 of the Securities

Act. As a direct and proximate result of said defendant's wrongful conduct, plaintiff and the other members of the Class have suffered damages.

--14- 14 - PRAYER FOR RELIEF

WHEREFORE, plaintiff prays for judgment as follows: declaring this action to be a proper class action, awarding damages, including interest; and such other relief as the Court may deem proper.

JURY DEMAND

Plaintiff demands a trial by jury.

DATED: December 6, 2000 MILBERG WEISS BERSHAD HYNES & LERACH LLP

______Steven G. Schulman (SS-2561) Samuel H. Rudman (SR-7957) One Pennsylvania Plaza New York, NY 10119 Telephone: 212-594-5300

Attorneys for Plaintiff

--15- 15 -