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Grubman Says He 'Invented' Story About Weill and Reed

Nov 13, 2002 | Wall Street Journal Former Citigroup analyst Jack Grubman said early Wednesday that he fabricated a story that Citicorp Inc. Chief Executive Sanford I. Weill had pushed him to upgrade an investment rating on AT&T Corp. in an effort by Mr. Weill to gain favor with the chairman of the telecommunications giant.

The assertion by the star analyst about Mr. Weill's motivation had caused a stir inside the company and across Wall Street, prompting Mr. Weill to issue a strongly worded denial early on Wednesday. Hours later, Mr. Grubman followed with his own statement: "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."

Mr. Grubman had made his assertions about the upgraded rating of AT&T in a series of e-mail messages in January 2001, which were sent to an analyst at a money-management firm. According to the e-mails, Mr. Weill had pressured Mr. Grubman because Mr. Weill wanted to gain the support from AT&T CEO C. Michael Armstrong, a key Citigroup board member, to help "nuke" Citigroup's former co- chairman, John Reed, in early 2000, people close to the matter say.

In his statement Wednesday, Mr. Grubman, who resigned from Salomon, under pressure, in August, said his research on AT&T "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."

Mr. Weill, in a memo to senior management that was released early Wednesday, acknowledged that he had asked Mr. Grubman to "take a fresh look at AT&T in light of the dramatic transformation of the company and the industry." But he denied that his request was part of an effort to sway the vote of Mr. Armstrong.

"I always believed that Mr. Grubman would conduct his own research and reach independent conclusions that were entirely his own," Mr. Weill said.

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