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Citigroup Taps Masin as COO

October 02, 2002|From Bloomberg News

NEW YORK — Citigroup Inc. named Verizon Communications Inc. President Michael T. Masin as chief operating officer on Tuesday, reaching outside as the financial giant tries to move beyond scandals that have slammed its stock.

Also, Citigroup Chairman Sanford I. Weill said he will leave the boards of AT&T Corp. and United Technologies Corp., two firms whose CEOs serve as directors on Citigroup's board.

As part of a broad investigation of Citigroup's practices, New York Atty. Gen. Eliot Spitzer is probing whether Jack Grubman, former star telecom analyst at Citigroup's Salomon Smith Barney unit, improved his recommendation on AT&T stock after Weill asked him to reexamine his research in 1999.

At the time, Salomon was having trouble getting an assignment in underwriting AT&T Wireless' mammoth initial stock offering. Citigroup later managed to get a piece of the deal and received about $45 million in fees.

Weill's decision to quit the AT&T and United Technologies boards is aimed at lowering the potential for conflicts of interest between the bank and clients, analysts said. "Weill is trying to put Citigroup's conflicts behind it and this is another step toward doing that," said Charles Elson, director of the University of Delaware's Center for Corporate Governance.

The appointment of Masin, 57, also is an effort to address governance issues, experts said.

Masin will serve as chairman of a new business-practices committee at Citigroup that will lead companywide efforts to impose limits on practices that led to the investigations by Spitzer and other regulators, the bank said. The committee includes all of Citigroup's division heads and reports to Weill.

Masin "is there to give a fresh, noninvestment-banking approach to a more above-board way to do business," said Stephen Berman, who helps manage $9 billion in assets, including Citigroup shares, at Stein Roe Investment Counsel.

Citigroup is in settlement talks with Spitzer and federal regulators over its business practices and the conduct of its analysts during the bull market. On Monday Spitzer sued five telecom executives, alleging that they directed underwriting business to Salomon in the 1990s in return for hot new stock offerings.

Citigroup shares rose $1.35 to $31 on the New York Stock Exchange on Tuesday. The stock is down 39% year to date.

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