Citigroup's former star analyst, Mr Jack Grubman, today renounced emails in which he claimed to have manipulated his stock picks to help a power struggle inside Citigroup, saying he lied to inflate his "professional importance."
Mr Grubman, already under fire for questionable calls made as a top telecommunications analyst, said what he wrote in a series of emails to a colleague at another firm was "completely baseless" and "personally embarrassing."
In the messages, Mr Grubman reportedly said Citigroup chief executive Mr Sandy Weill pushed him to raise his rating on AT&T stock to enlist the support of AT&T chief executive Mr Michael Armstrong in a boardroom struggle against Citigroup's former co-chairman, Mr John Reed, in early 2000.
Citigroup called the claims "pure fantasy." Citigroup's stock fell $1.59, or 4.37 per cent, to $34.80 by mid-morning.
Citigroup said the suggestion that Weill pressed for the upgrade to win Armstrong's support was "nonsense."
The existence of the e-mails was reported by the Wall Street Journaltoday, which said the messages were uncovered by New York State Attorney General Mr Eliot Spitzer.
Mr Spitzer's office has been probing whether Salomon Smith Barney, the Citigroup unit where Grubman worked, upgraded AT&T shares in 1999 to win a lucrative financing deal from the giant phone company.
Investigators want to know whether Mr Grubman, who resigned in August, raised his rating on AT&T to win underwriting business for Citigroup in the initial public offering of AT&T's wireless division.
Grubman upgraded AT&T's shares to "buy" in October 1999, the month before AT&T announced the IPO. Mr Grubman said in the statement that the upgrade was not designed either to help win investment banking business or to influence Armstrong's role as a board member of Citigroup.
In the past, Mr Weill has acknowledged some ethical lapses at Citigroup, but has firmly maintained the company has done nothing illegal.