N.Y. Preschool Scramble, Wall St. Scandal Collide
A Star Stock Analyst Is Accused of Going All Out To Get His Tots Hot SpotsNov 16, 2002 | The Philadelphia Inquirer Getting into the right preschool here ain't hopscotch.
In a bizarre but somehow typically Manhattan twist, Wall Street scandal and child care merged this week, when it was reported that onetime star stock analyst Jack Grubman apparently was willing to fudge his rating of AT&T stock to get his toddler twins into the exclusive 92d Street Y preschool.
Admissions to upscale private preschools are so fiercely competitive here that a cottage industry has sprung up to assist apprehensive parents with advisers, consultants and detailed guidebooks.
"The day after Labor Day, the gun goes off," said Victoria Goldman, coauthor of The Manhattan Directory of Private Nursery Schools. "You hire somebody to work the phones and keep pushing the redial."
Specifically, she said, that happens because most schools won't accept applications for the next school year until the day after the preceding Labor Day.
More generally, she said, it happens because parents believe the right preschool will channel their child to the right elementary school, which will feed into the right private high school, which will deliver said child directly to the ivy-fringed gates of Harvard, Penn or Brown.
There are 150 nursery schools in the current edition of her directory, Goldman said, but only about a dozen inspire the kind of intensity displayed in the Grubman affair.
"The Brick Church School, the West Side Montessori, Chelsea Day," she said, are among those so coveted that wealthy parents must and will pull any string to get their offspring in. Another in that stellar group is the preschool attached to the 92d Street Y, one of New York's premier cultural institutions.
Goldman, who lives on Manhattan's upper East Side, said she wasn't surprised that preschool had emerged as an issue in the tale of Grubman's fall from grace.
"When you have this high concentration of wealth in one area, you are going to have the best nurseries," she said. "But of course not everybody can get in."
Her own three children, she said, went to "a low-key no-name nursery school" but nevertheless have been accepted by "top tier" private high schools in the city. Still, she said, many parents, Grubman obviously among them, believe that name-brand nurseries are crucial to ensuring their 2-year-old's future success.
Several newspapers reported obtaining e-mail messages sent by Grubman a Philadelphia native and hugely successful telecom stock analyst during the 1990s to Sanford I. Weill, his boss at Citigroup Inc. in 1999.
Weill had urged Grubman to take a "fresh look" at AT&T, whose stock Grubman had not been recommending, at a time when Citigroup hoped to win investment banking business from the telecom giant.
If Grubman were to recommend AT&T stock to clients of Citigroup's Salomon Smith Barney brokerage unit, AT&T would be more likely to steer business to Citigroup's bankers.
Grubman had been bearish on the stock, but in November 1999 he wrote an e-mail to his boss titled, according to news reports, "AT&T and the 92d Street Y."
In it he detailed his discussions with AT&T officials and indicated that he might soon recommend the stock. Then he told Weill about the "ridiculous but necessary process of preschool applications" he was facing "it's statistically easier to get into the Harvard Freshman Class than it is to get into pre-school" at the 92d Street Y and enlisted Weill's support in winning admission for his twins, a boy and a girl.
"Anything you can do, Sandy, would be greatly appreciated," he wrote, according to the Wall Street Journal.
Grubman subsequently changed his rating on AT&T stock to urge clients to buy, and Citigroup made a $1 million donation to the 92d Street Y, which was founded more than a century ago as the Young Men's Hebrew Association and offers highly regarded lectures, concerts and other cultural events.
Weill and Grubman have denied any wrongdoing; they have not denied the authenticity of the e-mail.
The Y, for its part, denies any connection between its admissions and donations or anything else except merit.
Grubman's children got in. The Y, like most preschools in the same class, charges about $14,000 a year for 5-year-old pupils, less for younger children.
For the money, the children get an attentive staff, a retractable roof on the building's upper-story playground, and lots and lots of cachet. The Y has only 65 slots each year, and even booking an appointment to apply is so limited only the first 300 to get through are taken that it requires those hired speed dialers and all the networking that parents can muster.
But Goldman said that Grubman's alleged actions hyping a stock to win his children a coveted spot were out of bounds even for the hyper-competitive atmosphere of Manhattan.
"It's bad behavior," she said of the Northeast High School graduate. "He's going to get a time-out."