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.
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.
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