Weill Vows Citigroup Will Change Its Ways
Citigroup Inc. Chairman Sanford I. Weill, in his annual meeting address to shareholders Tuesday, said allegedly deceitful brokerage practices exposed by regulators over the last year don’t reflect “the way we want to do business ... or intend to do business in the future.”
Weill’s contrite presentation at Carnegie Hall closed with a group sing of “My Country ‘Tis of Thee” carrying through the storied chamber.
At the meeting, Weill described 2002 as one of the most difficult years in his career and the long history of Citigroup, the largest U.S. financial services company and parent of Citibank and brokerage Smith Barney.
Before taking their red velvet seats, hundreds of attendees stood in a line that twisted around the corner as they were escorted through metal detectors amid tight security.
Federal and state regulatory inquiries into Wall Street brokerage practices during the late 1990s bull market have brought Citigroup and other Wall Street firms into a $1.5-billion settlement with authorities. Citigroup is paying a fine of $300 million, the largest penalty of 10 major brokerage firms.
“Our company, like others, was roiled by intense scrutiny of our business practices, which in hindsight does not reflect the way we want to do business and not the way we are doing business now, or intend to do business in the future,” Weill said, alluding to the regulatory crackdown.
“We cooperated fully with the regulators and their investigation,” he said.
In a coincidence of speeches, a few blocks from Carnegie Hall, New York Atty. Gen. Eliot Spitzer, who doggedly pursued alleged wrongdoing at the brokerage firms, told a group that the final language of the settlement with the firms is expected by the end of next week.
The settlement addresses charges that brokerage firms put their interests ahead of investors, issued tainted research and secretly handed out hot stocks to favored clients.
“Revelations about widespread industry practices shook the confidence of the markets in a way that I have not seen in my long career in the investment business and it became all too clear that we as an industry needed to change,” Weill told the company’s investors.
Shareholders who chose to make public comments were about evenly split between those who praised or criticized Citigroup’s practices and performance. Some praised Weill for not taking a bonus in 2002, compared with a 2001 bonus of nearly $17 million.
Four shareholder proposals failed to pass, although one that would require shareholder approval of severance packages over a certain level of pay received 30% of the votes.
One of the last shareholders to step before the microphone in the aisle was Carl Bode of Oklahoma City, who told the assembled executives and shareholders that this was his second visit to Carnegie Hall, and that he had one request.
He asked Weill if he would join him in singing “My Country ‘Tis of Thee,” a request that Weill gladly agreed to. All those attending rose and sang the patriotic tribute to America.
Citigroup shares rose 82 cents to $39.25 on the New York Stock Exchange, the highest price since June.
The company on Monday reported first-quarter earnings of $4.1 billion, which exceeded analysts’ expectations.
