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.