Ethical Dilemma- SWAPPING PERSONAL FAVORS Jack Grubman was a powerful man on Wall Street. As a star analyst of telecom companies for the Salomon Smith Barney unit of Citigroup, he made recommendations that carried a lot weight with investors. For years, Grubman had been negative on the stock of AT&T. But in November 1999, he upgraded his opinion. Based on e-mail evidence, it appears that Grubman’s decision to upgrade AT&T wasn’t based on the stock’s fundamentals. There were other factors involved. At the time, his boss at Citigroup, Sanford ―Sandy‖ Weill, was in the midst of a power struggle with co-CEO John Reed to become the single head of the company. Meanwhile, Salomon was looking for additional business to increase its revenues. Getting investment banking business fees from AT&T would be a big plus. And Salomon’s chances at getting that AT&T business would definitely be improved if Grubman would upgrade his opinion on the stock. Furthermore, Weill sought Grubman’s upgrade to win favor with
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Citigroup, Salomon Brothers, Jack Grubman, Grubman