Citigroup Paying Grubman to Help Fight LawsuitsAug 19, 2003 | The Times, UK JACK GRUBMAN, the former Salomon Smith Barney technology analyst, is still on the payroll at the brokerage, taking home $50,000 (£31,000) a quarter.
Mr Grubman, who rose to prominence during the dot-com boom of the 1990s, left a year ago over his role in producing what regulators claimed were fraudulent research reports.
Citigroup, which owns Salomon Smith Barney and has renamed the unit Citigroup Global Markets, is now fighting lawsuits from disgruntled investors and has retained Mr Grubman to work at least 15 hours a week to help to defend the bank. The payments, although not reported when Mr Grubman parted company with the bank, form part of his $33 million severance package. He has also been provided with an office at Citigroup.
Salomon Smith Barney said at the time of Mr Grubman’s departure last year: “It is a standard part of our severance agreements to ensure that ex-employees co-operate honestly and truthfully in connection with all investigations. In Jack Grubman’s case, we knew his time commitment to do this would be substantial, and we agreed to provide reasonable compensation for the time he would need to spend working on legal, regulatory and governmental proceedings.”
Mr Grubman will continue to be paid $50,000 a quarter until the end of the year, or for as long as his services are needed. Citigroup is also paying his legal costs.
As part of a civil investigation, Mr Grubman was fined $15 million and was barred from the securities industry for life. He is named in 738 arbitration cases by investors who say they were financially burned when they made decisions based on his advice.
Mr Grubman’s severance package included an agreement to forgive $15 million of loans.