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N.Y. Wants The 4-1-1 From AT&T

AT&T has received a subpoena from New York's attorney general as part of an investigation into whether a top analyst for Citigroup Inc. upgraded his rating on the telecommunication giant's stock to help the bank land a role advising on a $10.6 billion deal.

AT&T spokeswoman Eileen Connolly confirmed Friday that the company had received the subpoena from New York Attorney General Eliot Spitzer's office, and is providing documents to investigators. She declined to elaborate.

The subpoena focuses on whether telecommunications analyst Jack Grubman changed his rating on AT&T to help Citigroup's Salomon Smith Barney investment banking division win the role underwriting AT&T's April 2000 deal, according to a source familiar with the matter, who spoke on condition of anonymity.

The deal was to help set up an AT&T tracking stock to finance the company's wireless division, and the underwriters received tens of millions of dollars in fees.

Spitzer spokesman Darren Dopp said an investigation is under way, but declined further comment.

The Wall Street Journal reported Friday that Spitzer is also investigating what role Citigroup chief executive Sanford Weill may have played. The Journal cited unidentified people familiar with the matter.

Salomon Smith Barney was selected as a lead underwriter for the deal after Grubman upgraded his rating on AT&T shares to "buy," the Journal said. Grubman had been bearish on AT&T stock for years.

The Journal previously reported that Weill, an AT&T board member, encouraged Grubman to give AT&T a fresh hearing before Salomon landed the underwriting role.

Salomon spokeswoman Susan Thomson denied that Weill pressured Grubman to change his AT&T stock rating. She declined comment on whether Weill encouraged Grubman to take another look at the stock.

"I can tell you Mr. Weill never told any analyst what to write and any suggestion he did is outrageous and untrue," she said.

Grubman's attorney, Lee Richards III, didn't immediately return a telephone message left Friday seeking comment. Asked about the stock rating change in 2000, Grubman told the Journal: "Anyone who knows me knows that I call them as I see them."

Dopp said Grubman's resignation earlier this month wouldn't affect Spitzer's investigation into Wall Street analysts that began with Merrill Lynch & Co., the nation's largest brokerage.

In May, Merrill Lynch agreed to pay a $100 million fine and adopt reforms designed to separate analysts from investment bankers. Several brokerages have since agreed to reforms, including Salomon Smith Barney, the investment banking division of Citigroup.