The Telegraph
Since 1st March, 1999
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Salomon chief removed in Citigroup shakeup

New York, Sept. 9: Under scrutiny from regulators and Congress for its role in a series of financial scandals, Citigroup, the nation’s largest financial-services company, said on Sunday that it had replaced the chief executive of its investment bank—Salomon Smith Barney—with a more senior executive with a legal background.

Sanford I. Weill, Citigroup’s chairman and chief executive, said in an interview late Sunday that it was “in the best interests of the firm” for Michael A. Carpenter to leave his job as chairman and chief executive of the company’s global corporate and investment bank. Weill said that Charles O. Prince, a former general counsel who has been Citigroup’s chief operating officer, would replace Carpenter immediately.

In a statement Citigroup released, Weill apologised for some of his company’s actions.

“There are certain industry practices that we should all be concerned about, and although we have found nothing illegal, looking back, we can see that certain of our activities do not reflect the way we believe business should be done,” Weill said. “That should never be the case, and I am sorry for that.”

Weill said he and Robert E. Rubin, the former treasury secretary who is a vice-chairman of Citigroup, would get more involved with managing the investment bank, known as Salomon Smith Barney. The Salomon unit is under investigation for its role in financing the failed Enron Corp., WorldCom and several other troubled telecommunications companies.

The investigators and regulators are seeking information about the role Salomon stock analysts played in promoting companies that have failed or are on the brink of failure.

Jack B. Grubman, who was the most influential and the best-paid analyst of telecommunications stocks, left the firm last month, a few weeks after testifying before a congressional committee that is investigating accusations of accounting fraud at WorldCom. Grubman disclosed then that his relationship with WorldCom and its former chief executive, Bernard J. Ebbers, was so close that he had attended meetings of its board. Grubman has denied any wrongdoing

Salomon revealed to Congressional investigators last month that Ebbers had made profits of $ 11 million by selling shares of highly sought new stocks that Salomon had made available to him. Salomon said it was merely catering to one of its better brokerage customers.

Prince, 52, appears to be acting as a sort of fireman in the boardroom for Weill.

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