No Role for Salomon in National IPO

Citigroup Inc.’s Salomon Smith Barney investment bank has decided not to seek a role in arranging the initial stock sale for National Financial Partners Corp., a company run by the daughter of Citigroup Chairman Sanford I. Weill.

Citigroup, the world’s biggest financial services company by market value, is being probed by regulators for conflicts of interest. Weill’s daughter, Jessica Bibliowicz, is president and chief executive of National Financial, a firm backed by financier Leon Black that buys insurance and financial planning firms.

“Sandy and Jessica agreed together that it was more appropriate to use other bankers,” Citigroup spokeswoman Leah Johnson said Friday. She declined to elaborate.

A spokesman for National Financial declined to comment except to say Salomon will not underwrite the IPO. The New York-based company said last month it plans to go public early next year.

Citigroup’s decision shows how probes by New York Atty. Gen. Eliot Spitzer and the Securities and Exchange Commission have forced the company to reconsider the way it does business, analysts said.

Spitzer is reviewing Weill’s role in helping former Salomon analyst Jack Grubman get his children into an exclusive New York nursery school and Weill’s request that Grubman “take a fresh look” at AT&T; Corp., of which Weill was a board member. Citigroup was hired to help arrange a sale of shares in AT&T;’s mobile-phone business after Grubman raised his rating on AT&T.;

Weill agreed last month to leave the AT&T; board. He had been a director since 1998.

Citigroup probably will pay a $500-million fine to settle investigations into whether Salomon analysts misled investors, people familiar with the talks said.

Citigroup shares fell 9 cents to $38.88 on the New York Stock Exchange on Friday.

Schwab Sued Over Termination Fee

Charles Schwab Corp.’s $60 account-termination fee was instituted this year without fair warning to customers and should be rescinded, according to a customer’s lawsuit.

Michael Baker, a Los Angeles resident, sued the biggest discount brokerage after it charged him $60 to transfer his assets to a rival brokerage.

The negligent misrepresentation and misleading advertising suit seeks class-action status, unspecified monetary damages and an order to strike the fee.

A spokesman for San Francisco-based Schwab said he hadn’t seen the suit and declined to comment on it.

Shares of Schwab, which have fallen 20% in the last 12 months, fell 2 cents to $11.54 on the NYSE.

From Bloomberg News

Fund Managers Betting on U.S. Economy

Mutual fund managers across the globe in November bet the U.S. economy would gain momentum ahead of other regions and boosted holdings of U.S. equities at the expense of Europe and Japan, according to a Reuters poll taken this week.

The survey of 43 fund managers showed investors were cheered by the Federal Reserve’s recent interest rate cut, the poll found. Recently released economic data, such as the 2.8% rebound in October durable-goods orders, buoyed sentiment for U.S. equities.

Since hitting a five-year low Oct. 9, the Dow Jones industrial average has climbed 22%. The FTSE Eurotop 100 index of European shares has risen 18% in the same period.

Fund managers in countries that use the euro raised their holdings of U.S. stocks to an average of 54.1% of their total portfolios in November, from 51% the previous month.

British fund managers upped weightings of U.S. stocks, raised European debt holdings and cut holdings of cash and Japanese stocks in November, the poll found. Fund managers in Britain raised weightings of U.S. stocks for the fourth month in a row and to the highest weightings in more than 20 months.

U.S. equity fund managers increased their allocation of U.S. stocks to 50.9%, from 49.5% in October, while they cut their cash reserves, reducing cash to 6.1% from 7.8% in the previous month.

U.S. fund managers also cut their exposure to fixed-income securities such as Treasuries, assuming that bonds would lose their relative appeal as stock markets rose. They cut their average allocation of Treasuries to 16.4%, from 23.3% in October.

From Reuters