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Citigroup CEO Weill To Be Grilled By Spitzer

Oct 24, 2002 | National Post

Sandford Weill, the chairman and chief executive of Citigroup Inc., volunteered yesterday to be grilled as part of a sweeping probe into Wall Street ties between research and investment banking.

Eliot Spitzer, the New York Attorney-General, said he plans to question Mr. Weill but insists the chairman of the powerful New York banking and investment firm is not a target of his investigation.

"Sandy Weill has offered to meet with our office and we've accepted his offer of co-operation," said Juanita Scarlett, a spokeswoman for Mr. Spitzer.

At the same time, a U.S. congressman is demanding Mr. Spitzer expand his probe of Citigroup and its investment division, Salomon Smith Barney, to include Robert Rubin, the former treasury secretary who is chairman of Citigroup's executive committee.

"What's truly troubling is the apparent covering up and camouflaging at the executive level of Citigroup," said Rep. Mark Foley, who demanded in August the U.S. Securities and Exchange Commission launch a probe of Mr. Rubin. "If not with Mr. Weill and Mr. Rubin, where exactly does the buck stop?"

Mr. Rubin's name came up in the initial probe of collapsed Enron Corp. after he attempted to convince a U.S. Treasury official to ask Wall Street credit reporting agencies not to downgrade the debt of the Houston energy trader.

However, Mr. Spitzer is so far concentrating his probe of the connections between research analysts and investment banking on whether analysts were told to write glowing reports on companies in the hopes of winning underwriting business.

Mr. Weill denied news reports yesterday that Mr. Spitzer's office told Citigroup attorneys the company's interests may have diverged from those of Mr. Weill, calling them "outrageous speculation and wild inferences.

"I have never told any analyst what he or she had to write, and I never would," Mr. Weill said. "My conduct has been entirely appropriate and proper."

Citigroup's lawyers dismissed the possibility of charges against Mr. Weill. "There is no divergence between the interests of Sandy and Citigroup," said Marty Lipton, a partner at law firm Wachtell, Lipton, Rosen & Katz in New York.

The Citigroup case largely revolves around Jack Grubman, a former star telecommunications analyst who resigned from Salomon in the wake of criticism that he upgraded AT&T Corp. to a "buy" in October, 1999, a month before AT&T announced the initial offering for its wireless division. Citigroup acted as underwriter, along with Merrill Lynch & Co. and Goldman Sachs Group.

Mr. Spitzer is investigating whether Mr. Weill pressured Mr. Grubman into raising his AT&T rating to win a role in the wireless offering. Mr. Weill has since quit the board of AT&T.

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