The announcement that Sallie Krawcheck, head of Citigroup Inc.’s global-wealth-management group, will leave the firm "to pursue other opportunities" at the end of the year has sparked fevered speculation on the Street and in the firm as to the reason for her ouster.
Many think she was forced out due to disagreements with Citigroup chief executive Vikram Pandit, according to interviews and press reports.
Some say Ms. Krawcheck wanted the firm to make customers whole for losses in mortgage-backed hedge funds and auction rate securities, and clashed with Mr. Pandit over plans to restructure the firm.
She was a “strong advocate” for the Smith Barney sales force, which thought the firm should do more to make hedge fund customers whole, said a Smith Barney rep, who asked not to be identified.
“I think [Ms. Krawcheck’s departure] is really about her [earlier] role as chief financial officer” at the company, said one source, a former manager at the firm, who asked not to be identified.
Many CFOs failed to deliver enough information to chief executives at the major firms about their risk levels, this source said.
“The leveraging-up of the balance sheet occurred on her watch,” said another Smith Barney rep, who asked not to be identified.
But in standing up for the interests of brokers and clients, “I'm glad she clashed” with management, the rep said.
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