Research prize is a Salomon surprise

Salomon Smith Barney, the Wall Street firm that recently fired the disgraced telecoms analyst Jack Grubman, has won the prestigious Institutional Investor award for best US research house.

The prize will surprise investors in WorldCom, the bankrupt US telecoms group heavily pushed by Mr Grubman, and Eliot Spitzer, the New York attorney general, who is pursuing Salomon over its conflicts of interest in tipping WorldCom shares while advising the group on deals.

After WorldCom collapsed earlier this year, Mr Grubman was hauled before a Congressional committee to explain his touting of the stock during its brief rollercoaster ride on Wall Street.

His history of recommending telecoms stocks that later fell from grace led one influential US magazine to ask: "Is Jack Grubman the worst analyst ever?" Salomon dismissed him in August, though his demise was softened by a $30m (£18m) pay off.

However, the problems with Mr Grubman, the investigation by Mr Spitzer and the $5m fine Salomon had to pay to the National Association of Securities Dealers to settle an investigation into its research practices, did not stop Salomon being voted the top Wall Street research house.

The firm, which is owned by banking giant Citigroup, had 53 analysts named as top players in the annual survey of money managers conducted by the magazine Institutional Investor.

Merrill Lynch, which recently agreed to pay a $100m fine to settle a conflict of interest charge brought by Mr Spitzer, took second place jointly with Lehman Brothers.