Disgraced Grubman still on payroll at Citigroup

Jack Grubman, one of the chief villains of Wall Street's recent stock valuation scandals, is still being paid $200,000 a year by his old firm despite being banned for life from the securities industry for misleading his clients with pumped-up reports on telecommunications companies.

Yesterday's Wall Street Journal reported that Mr Grubman is being paid to help Salomon Smith Barney - recently renamed Citigroup Global Markets - with numerous legal challenges arising from his case.

The company is picking up his personal legal bills and has even given him an office.

The revelations are likely to trigger further outrage among the many individual investors now suing Mr Grubman for his role in the loss of their life savings. He has been accused of deliberately overvaluing companies on Salomon Smith Barney's client roster even when, like WorldCom and Global Crossing, they were spiralling towards bankruptcy.

In common with Henry Blodget at Merrill Lynch, he was openly derisive of some of the companies he was recommending. "We support pigs," he wrote in one e-mail.

In a deal reached with New York State's attorney general, Eliot Spitzer, Mr Grubman escaped criminal prosecution for stock fraud but was ordered to pay $15m (£9.5m) in fines. His company was fined a further $200m.

There is little evidence, however, that Mr Grubman has been made to feel much personal financial pain.

His severance package from Smith Barney was worth about $33m, including a provisional agreement to forgive $15m in loans made to cover the cost of his fine.

Some Wall Street columnists have sought to defend Mr Grubman, saying he was caught up in the stock bubble of the late 1990s like everyone else and should not now be punished with the wisdom of hindsight.

To the broader public, however, he has become one of the symbols of Wall Street dot-com era excess and the conflict of interest arising from brokerage firms acting as stock analysts and consultants at the same time.

The most eye-catching episode of excess involves the efforts Mr Grubman made to get his children into a super-exclusive pre-school.

According to court documents, Mr Grubman deliberately overvalued AT&T stock to help Smith Barney's parent, Citigroup, land a $63m investment banking deal.

In exchange, Citigroup made a $1m donation to the Y school on 92nd Street and ensured the young Grubmans were accepted.