LYCOS RETRIEVER 
Sanford Weill: Jack Grubman
built 275 days ago
In a society where the value of labor was truly respected, the actions of Jack Grubman and Sanford Weill would be more than just another facet of a business cycle. Their actions do speak of a rot that pervades Wall Street, but they ... speak of a huge gap between what ordinary citizens can even dream of doing and what the members of the American overclass can do without even straining themselves. And American labor is often so cowed by the power of big business and the governments that they effectively control that it dare not speak too loudly. Perhaps there is hope yet for labor; perhaps the overclass has finally gone too far. Let the overclass tremble at a revolution. Will the preschool workers realize that they have little to lose and a world to win?
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In rapid fashion, Weill has settled civil fraud charges with the NASD and the suit by the FTC accusing Citi of predatory lending. The NASD had charged that Grubman had recommended shares of Winstar Communications even though he privately harbored concerns about the telecom firm's prospects. While Salomon agreed to pay the NASD $5 million in fines, Grubman wants to fight the accusations and, according to the Wall Street Journal, has indicated that he wants to talk with investigators about the role Salomon's corporate culture played in the practices at the heart of the trouble. It may be difficult, though, for him to claim he was pressured into bogus stock ratings. He has publicly said his ratings reflected his convictions. Grubman could not be reached for comment, and his lawyer declined to discuss the issue.
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The machinations of Weill, Grubman, and Armstrong read like a scene from Bonfire of the Vanities. But they ... speak to the extent that the alienation that Marx described in the Grundrisse is all too real. Weill threw $1 million of a corporation's funds so that the children of a key employee could go to a particular preschool. This action is so absurdly alienating that it almost transcends any notion of class. Certainly no one in the working class, delineated in any manner whatsoever, and certainly very few members of the bourgeoisie could possibly throw that much money around for such a trivial thing. Surely some preschool somewhere in New York would take Jack Grubman's twins, even if the 92nd Street Y turned them down.
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[L]ike many larger-than-life characters, Weill tripped up over mundane matters. Last year, E-mails from analyst Jack Grubman of Salomon Smith Barney, a Citi unit, suggested that Weill pressured him to raise his rating on AT&T, where Weill was a director. Amid speculation about an investigation--and even Weill's resignation--Citi settled that and other matters, paying $400 million. That allowed for an orderly succession at Citi: Weill will remain CEO until year's end, when he will be replaced by Charles Prince, a Weill ally who runs Citi's investment banking unit. -Richard J. Newman
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Perhaps most damaging... was when Weill personally became a target of New York Attorney General Eliot Spitzer's investigation into Wall Street practices. Weill admitted to having asked Grubman to "take a fresh look" at AT&T before Grubman raised his rating in November 1999. However, he denied giving Grubman a direct order to upgrade the stock and insisted the reason behind his request was his firm belief in the company. Weill did direct a $1 million request to the 92nd Street Y, where Grubman was trying to enter his children in its exclusive preschool, but denies that it had any connection to Grubman's upgrade.
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Some trace Citi's ethical lapses to Weill's 1997 acquisition of Salomon Brothers, a rowdy bond-trading house notorious for bending rules, which in 1991 suffered the wrath of regulators for trying to corner the market in Treasury securities. "Salomon had a well-known cowboy culture, and he did not put in the controls that were needed," says Michael Mayo, a bank analyst at Prudential Financial. Weill has been personally taken to task on two fronts: for possibly asking former telecom analyst Jack Grubman to rethink his negative opinion of AT&T, on whose board Weill sits, and for directing some of Citi's charitable giving to his pet causes.
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Jack Grubman