Jack Grubman, the Citigroup ( C) Salomon Smith Barney telecom analyst who became the poster boy for Wall Street conflicts of interest, is out of a job, leaving Citigroup by "mutual agreement."

But Grubman's departure will not quiet the debate over whether he and other Salomon executives stepped over the line in the firm's zeal to become the telecommunication industry's preferred investment banker.

Investigations by the New York State Attorney General's Office and the National Association of Securities Dealers into Grubman's close ties to many of the telecom companies he followed -- in particular, fallen telecom giant WorldCom -- will continue. And new questions are sure to arise about the reported $30 million severance deal Grubman is taking with him.

Excedrin

Grubman had become a legal headache for Citigroup with investors filing dozens of arbitration claims and lawsuits against him, many of which allege he had divided loyalties in touting stocks like WorldCom because of his associations with those companies.

Citigroup has acknowledged that Grubman attended more than a dozen corporate board meetings for some of the companies he covered, including WorldCom. It also acknowledged that Grubman offered advice in some mergers those companies were doing. Grubman even served as an official proxy solicitor in WorldCom's heated battle to buy MCI Communications -- the deal that turned the small long-distance carrier into a major player.

In some respects, Grubman's resignation is no surprise. Following his contentious testimony last month before a congressional panel looking into the collapse of WorldCom, Grubman had become a lightning rod for bad publicity. It also didn't help that most of the telecom stocks he had touted for so long to investors -- stocks like WorldCom, Global Crossing and Winstar -- have gone bust.

Last week Citigroup indicated just how far Grubman's star had fallen at the firm in a letter to Rep. Michael Oxley (R., Ohio), the chairman of the committee looking into the WorldCom collapse and allegations that Salomon may have given some WorldCom executives an inside track to profit on some hot initial public offerings. Citigroup attorney Jane Sherburne said Grubman's annual compensation package, which at one time totaled $20 million a year, had been slashed in recent years because of "his poor performance in picking stocks."

Grubstake

Sherburne also indicated that part of Grubman's compensation deal included a previously undisclosed loan that the bank would not require Grubman to repay if he fulfills "the terms of his agreement." Grubman's departure from Citigroup would seem to make it impossible for the analyst to comply, since his contract runs through next year. But The New York Times reports that as part of severance deal, Citigroup is not asking him to repay the reported $19 million loan.

News of Grubman's departure was first reported late Thursday by The Wall Street Journal. Later, in the evening, Citigroup confirmed his departure and issued a copy of Grubman's resignation letter to the firm.

In the letter, Grubman said he was leaving because the "current climate of criticism has made it difficult" for him to continue working at the firm.

"This constant barrage of unsubstantiated negative reports has also obviously made it personally very difficult for me to do my work and has caused my family great pain."

Citigroup shares, which have taken a beating this year because of the Grubman scandal and investigations in the Enron mess, were trading 2% lower in the premarket session.

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