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News > Companies
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E-mails may aid Spitzer case
Internal communication at Salomon could cement case against Grubman for NY Attorney General Spitzer.
July 16, 2002: 12:12 PM EDT

NEW YORK (CNN/Money) - Senior officials working with New York Attorney General Eliot Spitzer have gathered e-mails from Salomon Smith Barney executives that criticize one of its top researchers and could help the state's investigation into possible conflicts of interest among researchers and the investment banking units within brokerage houses, according to a newspaper report.

The internal e-mails discussing researcher Jack Grubman along with other building evidence may be enough for the attorney general to bring a case against him and the firm, a unit of Citigroup, sources close to the situation said, according to the Wall Street Journal report.

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Spitzer gave his staff until early August to build a case against the company, the report said.

Grubman is under investigation for his alleged dual role as researcher while also helping the investment bankers pitch new business, possibly misleading investors who purchased stock based on his recommendations. The firm also is being investigated for allegedly encouraging such practices with the promise of compensation for assisting with winning new business.

The National Association of Securities Dealers also is investigating Grubman for possible conflicts of interest.

Spitzer used internal e-mails as evidence against Merrill Lynch and one of its top researchers, Henry Blodget, in a similar case against the brokerage house that ended in a settlement of $100 million and a promise to split its research division from the investment banking unit.

But this time, many of the e-mails come from colleagues and criticize Grubman's double role rather than coming straight from him, sources say, according to the report.

Spitzer also is working on obtaining Grubman's compensation contract to find out how much of his income may have been tied to the investment banking deals he helped win as opposed to his stock picks, the Journal reported.  Top of page






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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.