The Telegraph
Since 1st March, 1999
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Grubman’s inbox spills out more dirt

New York, Nov. 15: Jack B. Grubman, the Citigroup analyst, boasted in an e-mail message early last year that he and Sanford I. Weill, Citigroup’s chairman, had played C. Michael Armstrong, the chief executive of AT&T, “like a fiddle,” according to two people who have seen the e-mail message.

In the e-mail message, which Citigroup turned over to regulators investigating conflicts of interest at Wall Street firms, Grubman told a friend that he had temporarily raised his rating on AT&T’s stock to accomplish two goals. One was to gain Armstrong’s support in Weill’s struggle for control of Citigroup. The other to secure Weill's help in getting his children into an exclusive nursery school in Manhattan.

Once he and Weill got what they wanted, Grubman wrote, “I went back to my normal negative self'' on AT&T and lowered his rating on AT&T stock. Armstrong, he added, “never knew that we both played him like a fiddle,” the people who have seen the e-mail message said.

A call to Grubman’s lawyer, Lee S. Richards, was returned by a spokesman, who did not respond to a request for comment. On Wednesday, Grubman said he had concocted the claim that he had helped Weill win the power struggle “to inflate my professional importance.”

A Citigroup spokeswoman, Leah Johnson, said Thursday that no company official had any more to say about the matter. Weill on Wednesday dismissed Grubman's claim as “sheer nonsense,” saying that he “would never attempt to manipulate a board member’s vote.”

But investigators see the document as a confession by Grubman that he had fraudulently misled investors about his true opinion of AT&T’s prospects. Grubman, the powerful telecommunications analyst on Wall Street during the 1990s, had held a negative view on the company for a long time before he raised his rating in November 1999. In October 2000, he lowered his rating on the stock to “neutral” again.

Weill admitted in a statement Citigroup released on Wednesday that he had asked Grubman, in late 1998 or early 1999, to “take a fresh look” at AT&T. Weill said he had not tried to pressure the analyst to raise his rating, but other analysts this week questioned how such a request from the chairman could be perceived otherwise.

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