Why do people sometimes distrust big business? Try this on for size:
Citigroup’s Salomon Smith Barney unit was first among the worst, according to Monday’s settlement between regulators and 10 investment banks. To settle charges stemming from allegations that it slanted research to support a voracious appetite for investment banking fees, Citigroup agreed to pay $400 million, the largest fine among those involved.
All together now: FOUR HUNDRED MILLION DOLLARS. When the fine is that high, it means they can’t even begin to estimate how often they screwed you and me and for how much. Here is how they did it:
Hundreds of documents obtained by New York Attorney General Eliot Spitzer paint a picture of a firm that perverted the stock analyst role from researcher to booster for its investment bankers. Regulators allege that Jack Grubman, who helped his firm win about $790 million in banking fees, issued “fraudulent” reports on two clients, Focal and Metromedia Fiber Networks. On Feb. 1, 2001, Grubman issued a buy recommendation on Focal, but in an e-mail to an institutional investor he admitted Focal was overpriced. Regulators also alleged that Grubman upgraded his opinion of AT&T without disclosing a conflict: In return for the positive opinion, Citigroup CEO Sandy Weill made a $1 million contribution to an exclusive preschool in Manhattan, ensuring that Grubman’s two children could go there.
Why aren’t these bastards in jail? What exactly does the SEC do when it takes a grandstanding NY Attorney General to make this shake out? Is this Grubman related to the punk who rank over all those people at a trendy vacation spot?
And don’t forget this little tidbit:
Three weeks ago, Citigroup renamed the tainted Smith Barney unit Citigroup Global Markets.
File this under things we need to remember:
Citigroup Global Markets is the corrupt Saloman Smith Barney.
Someone should make a banner.
JKC
Good point.. probably one of the few times I’ll agree with you, John.
(FYI- I think Elliot Abrams has been a fine AG)
If the Bushies and the GOP continue saying “I see nothing…” in the face of ever-growing numbers of corporate scandals, then I predict a long, dark time in the wilderness for them. That would not be a good thing. Opposition parties should be strong and vibrant to keep us honest…
John Cole
Actually- Ashcroft and the GOP have been prosecuting these guys. I’d file this under non-partisan business scum. For every Enron, there is a Global Crossing.
JKC
“I’d file this under non-partisan business scum”
No argument from me, John. I don’t give a fig which party they gave money to. If they’re crooks, put ’em in jail.
Correct me if I’m wrong, but Herr Ashcroft’s prosecution in the Enron case seems to be…well, sort of glacial. I know building these cases takes time, but I don’t think his heart is really in it.
HH
Citigroup seems to have more to do with Joe Lieberman than anyone else if I remember right… as for Enron, Drudge reported that charges are forthcoming this week.