Susan Kalla, one of the telecom industry's best-known and most respected analysts, was fired a week ago by

Friedman Billings Ramsey


, though the reasons remain murky and a matter of dispute.

The Virginia-based investment firm said it fired Kalla for failing to comply with policies and procedures relating to unspecified "trading activity and analyst communications," according to a brokerage filing.

Bill Dixon, an FBR spokesman, had little to add, saying she was "discharged in connection with an internal review related to her obligations as a research analyst."

Kalla, reached at her home, angrily disputed the firm's characterization and is threatening litigation.

"The firm's charges are inaccurate, and I will defend myself vigorously," says Kalla, who has retained an attorney. "I'm looking forward to spending the rest of my life in litigation with FBR."

Kalla's disputed dismal, which was first reported by

The Washington Post

, is the only blemish on her career. There are no regulatory violations or lawsuits reported on her brokerage registration statement.

Kalla, who had been at Friedman Billings for four years, was one of telecom's top analysts. Long before her peers, Kalla was predicting the coming bust of the telecom sector and in 2000 placed a rare sell recommendation on optical gear manufacturer


. At the time, Ciena was one of Wall Street's hottest telecom stocks.

When WorldCom collapsed in an epic accounting fraud in 2002, Kalla suggested that bookkeeping shenanigans could be much worse than the initial estimates. Over the years, her prescient telecom warnings attracted a loyal following and enhanced the stature of Friedman Billings' research team.

The dismissal comes at an awkward time for Friedman Billings, which is the focus of a regulatory investigation into the firm's role in managing a 2001 private stock sale by


( CDCY), a Maryland security company. Last November, the firm disclosed that the

Securities and Exchange Commission

and the


were both investigating the firm's role in finding hedge funds to invest in the deal, which was a kind of financing known on Wall Street as private investment in public equity, or PIPE.

Last month, in a surprise move, Emanuel Friedman, one of the firm's founders, announced he would retire in June as co-chairman and co-chief executive. The investment firm offered no explanation for Friedman's decision, but sources say it may be connected to the fallout from the regulatory investigation.

People familiar with the PIPEs investigation say the regulators are looking into allegations of improper trading in Compudyne shares by some of Friedman Billings' proprietary hedge funds, some of which are managed personally by Friedman and other top officials with the firm. (No source has mentioned Kalla in connection with that probe.)

The investigation of Friedman Billings is part of a broad inquiry by securities regulators into manipulative trading in the $14 billion-a-year PIPEs market. A year ago, the SEC issued subpoenas and requests for documents to 20 brokerages that have arranged PIPE deals for cash-strapped companies. Regulators subsequently issued subpoenas to about 10 hedge funds. The SEC is working in tandem with a parallel inquiry by the NASD.