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Spitzer Staff Gathers Salomon E-Mails Criticizing Grubman

Jul 16, 2002 | Dow Jones

Senior investigators for New York State Attorney General Eliot Spitzer have gathered internal e-mails from executives at Salomon Smith Barney criticizing telecommunications-stock analyst Jack Grubman that could form the basis of a case against the star researcher or the securities firm itself, people close to the matter told The Wall Street Journal.

The e-mails come as Mr. Spitzer has given his staff an early August deadline to provide him with evidence it has collected so he can make a final decision on any case against Mr. Grubman and the firm, a unit of financial-services giant Citigroup Inc. (NYSE: C - News) , these people say. Though no final decision has been made inside the attorney general's office on the matter, some senior officials in his office recently came to the conclusion that they now have enough evidence gathered against Mr. Grubman to bring a case against him, these people add.

Officials from Mr. Spitzer's office declined to comment. Salomon Smith Barney, in response to questions on the Spitzer inquiry, said: "It's inapproriate for us to comment on the course of Mr. Spitzer's inquiry, except to say that we're cooperating fully." Mr. Grubman didn't return a call for comment and the spokeswoman for the firm said he had no comment.

At issue for Mr. Grubman is his dual role helping Salomon Smith Barney win lucrative securities business from the nation's top telecom outfits while he was recommending investors snap up shares of these companies in his role as the firm's top-rated telecom analyst. Investigators from Mr. Spitzer's office are examining the possibility Mr. Grubman could have violated New York state law by failing to disclose his dual role to investors, many of whom lost big buying shares of technology companies thinking they were getting unbiased information from the telecom guru.

To be sure, many questions remain unanswered. It's unclear whether Mr. Spitzer would pursue potential criminal or civil charges against Mr. Grubman for any violations of New York state securities law. It is also unclear if other senior Smith Barney executives, or the firm itself, will face charges from Mr. Spitzer's office.


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