“After a 1½-year investigation into Wall Street stock-research abuses, the settlement is being held up — over semantics,” writes Charles Gasparino in today’s Wall Street Journal.

“The National Association of Securities Dealers and the New York Attorney General’s Office are heading for a showdown over a final regulatory report on stock-analyst conflicts at Citigroup Inc., threatening to delay completion of a broad settlement of research practices with Wall Street’s top firms.”

“The NASD, a major Wall Street regulator, is proposing tough wording in the report, which focuses on the research calls of former telecom analyst Jack Grubman. But New York state’s attorney general, Eliot Spitzer, who spearheaded the investigation of analyst conflicts that led to the pact, is seeking to tone down the wording, worried that it could complicate the conclusion of the agreement.”

“At issue is a settlement announced, but not finalized, last month under which nearly a dozen Wall Street firms agreed to pay about $1.5 billion to end a regulatory investigation into whether stock analysts misled investors by issuing overly bullish research during the stock-market bubble of the late 1990s. Citigroup has agreed to pay the largest penalty of any firm, $400 million, to settle its piece of the probe, which centers on, among other things, whether Mr. Grubman was pressured to upgrade the stock of AT&T Corp., a corporate client, by Citigroup’s chief executive officer, Sanford I. Weill. Included in the findings will be evidence of a series of telephone exchanges between Mr. Grubman and Mr. Weill before AT&T’s upgrade in late 1999. Citigroup, Messrs. Weill and Grubman all have denied wrongdoing.”

“It is how the allegations are described that will be debated in coming days. The NASD says it hasn’t yet spoken to Mr. Spitzer’s office about the language in the settlement pact. In one example that is likely to be discussed, from a draft report written by the NASD, the agency says Mr. Grubman’s glowing reports on telecom companies amounted to “boosterism,” according to a person who has seen parts of the report. Another section refers to allegations that Mr. Grubman boosted his rating of AT&T for personal reasons. And a third refers to Mr. Grubman’s “enthusiasm” lasting well beyond the bursting of the stock-market bubble. Mr. Spitzer prefers a blander version of the statement, one that notes merely that Mr. Grubman’s ratings on some stocks ‘were inconsistent with his true views,’ and cite several examples through his e-mails, this person says.”

“In an interview, Mr. Spitzer said both sides have different views over wording. ‘It’s a question of style,’ he said. ‘I’ve learned … to let the law speak for itself and not to embellish things with adjectives.’ People in the attorney general’s office say the NASD is aware of Mr. Spitzer’s views. But in a statement, the NASD said: ‘We have not yet had any conversations about the language in the settlement documents with the New York Attorney General’s office. We’ve worked cooperatively with that office in the past and expect that to continue.’ “