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Grubman Says He Fabricated Claims

Nov 13, 2002 | AP Jack Grubman, who was once among the most influential securities analysts on Wall Street, said Wednesday that he fabricated claims made in a 2001 e-mail in which he said raised his rating on AT&T stock to help his boss win a power struggle at Citigroup.

Grubman, the telecommunications analyst who recently resigned under pressure from Citigroup's Salomon Smith Barney brokerage, issued a statement in response to an article in The Wall Street Journal on Wednesday quoting a January 2001 e-mail in which Grubman said Citigroup Chief Executive Sanford I. Weill pushed him to review his rating of AT&T stock to win favor from AT&T CEO C. Michael Armstrong, a Citigroup board member.

The memo said Weill wanted Armstrong's support to "nuke" Citi's then co-chairman John Reed, the Journal said, citing people who have reviewed it.

In the statement Wednesday, Grubman said, "I have said a number of inappropriate, even silly, things in a few private e-mails that have been made public over the last few months. The contents of these particular e-mails, while personally embarrassing, are completely baseless.

"Regrettably, I invented a story in an effort to inflate my professional importance and make an impression on a colleague and friend. My research on AT&T was always done on the merits. It was not designed to help Salomon Smith Barney get investment banking business, nor was it designed to influence Mike Armstrong's vote on Citigroup board matters."

The e-mails were part of evidence gathered by New York State Attorney General Eliot Spitzer in his investigation of whether Wall Street research was skewed to help drum up investment banking business. Citi has been accused of conflict in its handling of telecommunications companies, with researchers touting specific firms that bankers had interest in cutting deals with.

Weill, in a memo to employees that was released by the company Wednesday, said "regulators have already received unequivocal sworn testimony from the author of the e-mails that they are fabrications with zero basis in reality."

Citigroup had asked regulators to keep the e-mails confidential, citing their defamatory nature, pending further investigation.

"Regrettably, the e-mails have reached the newspapers in spite of their lack of factual basis. Many of us share a deep outrage at this," Weill said.

"I have said before, and will say again: "I never told any analyst what he or she had to write and I never would. Nor would I ever attempt to manipulate a board member's vote. Any suggestion that I did is just wrong."

Weill said he had suggested that Grubman "take a fresh look at AT&T in light of the dramatic transformation of the company and the industry. I always believed that Mr. Grubman would conduct his own research and reach independent conclusions that were entirely his own."

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