The case against disgraced stock analyst Jack Grubman yesterday moved into one of the few arenas as bitterly competitive as Wall Street – Manhattan’s upmarket kindergartens. It was claimed that Mr Grubman’s children were given places at one prestigious nursery only after his boss, Citigroup chief executive Sanford Weill, pledged $1m to the institution.
Investigators working for New York’s attorney general Eliot Spitzer have questioned at least two school officials, the Wall Street Journal reported. They are seeking to bolster their case that Mr Grubman – formerly star telecoms analyst for Salomon Smith Barney, owned by Citigroup – boosted his assessments of some firms so his company could obtain or retain their investment banking business.
“We are going through the ridiculous but necessary process of pre-school applications in Manhattan,” Mr Grubman wrote in a memo to Mr Weill, made public last week. It requested Mr Weill’s help in gaining admittance for his twin children into the 92nd Street Y, a renowned kindergarten attended by, among others, a child of Woody Allen and Soon-Yi Previn. About the same time Mr Weill promised $1m to the nursery, a move Citigroup acknowledges was connected.
“We have never said that there is no connection between the donation and Jack Grubman’s effort to get his twins into the 92nd Street Y nursery school,” a spokeswoman said. “This request is similar to many we receive from employees asking for support.”
Establishing that connection is important to Mr Spitzer’s investigation into Citigroup because Mr Grubman implied in an email that Mr Weill’s donation, and his children’s ad missions to the nursery, came after he upgraded his assessments of AT&T stock. This was so Mr Weill, an AT&T director, could win the support of the chief executive, Michael Armstrong also a Citigroup director in an attempt to remove John Reed, a former Citigroup co-chairman.
“I used Sandy to get my kids in the 92nd Street Y… and Sandy needed Armstrong’s vote on our board to nuke Reed,” Mr Grubman wrote in an email to Carol Cutler, an analyst at another firm.
The nursery refused to comment yesterday.