Probes Get Citigroup to Rethink Structure

Citigroup Inc. must rethink the organization of some of its businesses as it deals with federal investigations of alleged stock research abuses at the nation’s largest financial services company, the head of its international unit said Thursday.

“We fully recognize the need to rethink the basic structure of some of our companies ... and a drive to establish the highest ethical business practices in the industry, which is beyond what the law requires,” Sir Deryck Maughan, Citigroup vice chairman and head of international operations, told a business executive conference in New York.

Maughan was filling in for Citigroup CEO Sanford I. Weill, who pulled out of a scheduled speech at the conference.

Citigroup is in talks with federal and state regulators to resolve allegations that its Salomon Smith Barney securities unit issued overly upbeat research to win lucrative investment banking deals by advising companies on new stock issues.

Salomon Smith Barney and other firms also have been charged with IPO “spinning” -- or bribing executives with shares of hot stock offerings during the late-1990s technology boom in exchange for banking business.

Citigroup last month tried to quell criticism of ties between investment bankers and stock analysts by creating a new unit separating banking from its research and brokerage operations. It brought in Sallie Krawcheck, the head of independent research firm Sanford C. Bernstein, to run the new unit.