Securities regulators reportedly intend to charge John B. Hoffmann, the former head of
global stock research team, with civil rule violations.
Hoffmann, who was responsible for supervising disgraced telecom analyst Jack Grubman, left the firm in October when New York State Attorney General Eliot Spitzer was still investigating conflicts of interests at the major brokerage firms. Hoffmann is the highest-ranking official to face possible charges for misleading investors with tainted stock research.
The NASD notified Hoffmann that it could charge him with violating rules on advertising, supervision and fair dealing with customers, the
Wall Street Journal
Securities and Exchange Commission
has also informed him that he could face failure-to-supervise charges.
Hoffmann's attorney, Charles Stillman, said his client "diligently and properly exercised his responsibilities as director of global equity research. He has fully cooperated with all interested regulators," according to the
. Citigroup declined to comment.
The NASD has also informed two other former Salomon research officials, Kevin McCaffrey and Timothy F. Tucker, that they could face similar charges, according to the
. McCaffrey gave up his job as head of U.S. stock research in October but like Tucker, he continues to work for Citigroup, according to regulatory filings.
Citigroup paid $400 million in April, the highest penalty of any Wall Street firm, to settle charges that its former Salomon Smith Barney unit issued fraudulent research. Telecom analyst Jack Grubman agreed to pay $15 million and be banned from the securities industry for life. Citigroup dropped the Salomon Smith Barney name this year and renamed its retail brokerage business Smith Barney. The rest of its securities business has no separate brand name.
Shares of Citigroup were up 1.5%, or 67 cents, at $46.04 Wednesday after Prudential raised its rating on the stock to hold from sell.