Salomon's Grubman quits

NEW YORK (CNN/Money) -- Controversial telecom analyst Jack Grubman has resigned from investment bank Salomon Smith Barney, according to a company memo obtained by CNNfn.

Grubman has been widely criticized for his close ties to now bankrupt companies WorldCom Inc. and Global Crossing Ltd., as well as his recommendation of their shares as they tumbled to become nearly worthless.

Grubman defended his work in his letter of resignation, which was included in the company's memo, saying that he was the unfair subject of second-guessing and unfair criticisms.

'Understand disappointment'

"I understand the disappointment and anger felt by investors as a result of that collapse (of telecom stocks)," he wrote, but added, "I am nevertheless proud of the work I, and the analysts who worked with me, did. It is hard for many to remember that our work led to analysis that for years helped investors understand a complicated, rapidly growing business and enjoy significant profits from their investments.

"I did my work as an analyst within a widely understood framework consistent with industry practice that is now being extensively second-guessed," he wrote.

"The relentless series of negative statements about my work, all of which I believe unfairly single me out, has begun to undermine my efforts to analyze telecommunications companies. This constant barrage of unsubstantiated, negative reports has also obviously made it personally very difficult for me to do my work and has caused my family great pain."

Salomon, a unit of financial services provider Citigroup, faces at least one lawsuit from a shareholder who said he had to file for bankruptcy himself after following Grubman's advice.

SEC investigation

It also faces a probe by the National Association of Securities Dealers into why he kept some of his buy recommendations as companies' financial problems mounted, as well as investigations by the Securities and Exchange Commission and New York Attorney General Eliot Spitzer into conflicts of interest in analysts' stock recommendations.

Grubman was called to testify before the House Financial Services committee about his ties to the industry and what he knew about accounting problems before they were revealed to the public. He denied any wrongdoing.

The memo announcing Grubman's resignation from Michael A. Carpenter, CEO of Citigroup's Global Corporate & Investment Bank, called Grubman "a hard working and dedicated professional" who has "long been a valued member of our research team."

"Jack and I agree that recent events have made it difficult for him, both personally and professionally, to stay in a job and industry that we know are important to him," said Carpenter's memo.

Carpenter said that while Grubman did not correctly forecast the collapse of the telecommunications sector, he agrees with Grubman's claim in his letter of resignation that, "he always wrote what he believed and conducted himself professionally and in accordance with legal and ethical standards."