New York Attorney General Eliot Spitzer is keeping a close eye on an arbitration case involving a former Citigroup ( C) stockbroker whose whistleblowing helped shape a congressional investigation into bubble-era initial public offerings.

Spitzer is seeking daily transcripts from the securities industry arbitration proceeding, which involves a $100 million wrongful termination claim filed by former Citigroup broker David Chacon. Spitzer's office requested the transcripts in a June 17 letter to the arbitrators. Sources say the unusual request is likely to be granted.

Chacon, who was dismissed three years ago, contends Citigroup fired him after he complained about the bank's former practice of awarding shares in hot initial public offerings to favored executives, including those at WorldCom and other telecom companies. He also claims he was a victim of racial discrimination.

Chacon's allegations about insider IPO allocations, a practice called "spinning" on Wall Street, led to a congressional investigation during the summer of 2002, when corporate scandals roiled the stock market. Chacon's claims also formed the basis of a civil lawsuit filed by Spitzer against several telecom executives who received shares in hot IPOs from Citigroup.

Behind the scenes, Chacon also worked with Spitzer's office in its investigation of other tawdry investment banking practices at Citigroup. The bank ultimately paid a $400 million penalty to settle allegations that its research analysts, most notably former telecom guru Jack Grubman, had issued biased and tainted stock recommendations in an effort to secure investment banking deals.

Spitzer's settlement with Citigroup was the centerpiece of the $1.4 billion global settlement hammered out in April 2003 by Spitzer and other securities regulators with 10 Wall Street firms.

The Chacon arbitration, which is occurring behind closed doors in Chicago, is expected to touch on many of the issues covered by the Citigroup settlement. One of the first witnesses that Chacon's attorney, Jeffrey Liddle, intends to call is Michael Carpenter, the former head of Citigroup's investment banking division and a former director of the New York Stock Exchange.

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