NEW YORK (CNN/Money) - Citigroup said Wednesday it is splitting its equity research and retail brokerage operations from its investment banking and underwriting businesses in an effort to stem criticism about analysts' conflicts of interest.

The unit will operate under the Smith Barney name and will have its own CEO; the company named Sallie L. Krawcheck to head the operation and report directly to Citigroup Chairman and CEO Sanford Weill, even though the unit still will be part of Solomon Smith Barney, which includes investment banking and underwriting.

Krawcheck previously was chairwoman and CEO of the research and private investment management firm Sanford C. Bernstein, a unit of Alliance Capital Management Holding (AC: Research, Estimates).

"This structure, under Sallie's leadership, will help assure that all equity research at Citigroup will be independent of corporate and investment banking and underwriting," Weill said.

Citigroup is one of the major Wall Street firms facing an investigation by New York Attorney General Eliot Spitzer as well as the Securities and Exchange Commission into whether analysts were pressured to give unjustified, positive ratings to stocks in order to help the firm win investment banking and underwriting business.

The National Association of Securities Dealers fined the firm $5 million last month because of a positive rating it gave now-bankrupt Winstar Communications as its stock price continued to plunge. The firm also faces lawsuits from clients who charged they lost money following the now questionable recommendations.

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In addition, the firm faces a probe into whether it gave shares in hot initial public offerings of stocks it was underwriting to the top executives of companies whose investment banking business it wanted to win.

Citigroup admitted Wednesday that this latest move to distance research from investment banking and underwriting will not solve all its problems with regulators.

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"Over the last several weeks, we have been working closely with our regulators and have been considering a number of ways to address the issues challenging the industry," Weill said.

"Our new structure is consistent with the goal of assuring the impartiality of research, which we share with our regulators. Our constructive conversations with regulators will continue and we will quickly implement any additional changes that are part of the revised regulatory framework," he added.

Spitzer's office said, "We are reviewing Citigroup's proposal. It seems to be an affirmative step, a step in the right direction."

Krawcheck, 37, is a former securities analyst herself, having covered the securities brokerage and insurance industry. In addition to the research analysts who will report to her, she will oversee the firm's Global Private Client Group, with over 12,500 financial consultants who serve high net-worth individuals.

Shares of Citigroup (C: up $0.41 to $36.91, Research, Estimates), a component of the Dow Jones industrial average, inched up at midday Wednesday.