Citigroup Inc. Chairman Sanford I. Weill has sought to distance himself from an upgrade of AT&T Corp. stock by star analyst Jack Grubman. But a previously undisclosed memo by Mr. Grubman shows him apprising Mr. Weill in detail about his meetings with AT&T officials that led to the upgrade, Friday’s Wall Street Journal reported.
In the Nov. 5, 1999, memo, Mr. Grubman said he had a “good meeting” with AT&T Chairman C. Michael Armstrong and “discussed a lot of things including some announcements that will occur” at a coming analyst meeting “and how to position them.”
The memo also advises Mr. Weill of future meetings Mr. Grubman had scheduled with AT&T officials. “I think all this will be very productive and, frankly, while this process has taken a while to unfold, the sense of urgency on Mike’s part clearly is allowing me to do the type of `no nonsense’ meetings that, unfortunately, are difficult to schedule with AT&T or at least have been in the past. Anyhow, I will keep you posted on the progress . . .” Weeks later, Mr. Grubman upgraded AT&T shares.
The memo, headed “AT&T and the 92nd Street Y,” is a key document in an inquiry into whether the change in AT&T’s rating may have been linked to Mr. Weill’s helping to get Mr. Grubman’s children accepted at an exclusive nursery school in Manhattan. After describing the AT&T review on the first page of the memo, Mr. Grubman on the second page quickly switched to reminding Mr. Weill of the school matter.
The correspondence, which came after Mr. Weill had urged Mr. Grubman to take a “fresh look” at his bearish stance on the telecommunications giant’s stock raises questions about whether Mr. Weill pressured Mr. Grubman to change his AT& T view.
The recent disclosures have raised the ire of some congressional investigators. “Information made available to the financial-services committee raises the possibility” that Mr. Weill, an AT&T director, “may have attempted to inappropriately influence Jack Grubman’s rating of AT&T,” said Massachusetts Rep. Barney Frank, soon to be the ranking Democrat on the House Financial Services Committee.
Mr. Grubman acknowledged this week that he had asked Mr. Weill “to help with the preschool and he did help, but none of that had anything to do with my research.” Mr. Weill for the first time publicly acknowledged that he did ask Mr. Grubman, who long had a negative rating on AT&T, to re-examine his view, but added: “I always believed that Mr. Grubman would conduct his own research and reach independent conclusions that were entirely his own.” Messrs. Weill and Grubman declined to elaborate Thursday.