In a major legal victory for Citigroup Inc. (C), an arbitration panel last week ruled against a $900 million claim from an investor who said he lost money by relying on allegedly flawed research issued by the bank.

A Citigroup spokesman on Thursday said a National Association of Securities Dealers panel rejected the claim of Donald Sturm, a wealthy Colorado investor who argued he held on to nearly 21 million WorldCom Inc. shares because former Citigroup analyst Jack Grubman highly recommended the company.

Citigroup argued that Sturm was a knowledgeable investor and should take responsibility for his decision. Arbitration hearings are held in private and the panel didn't disclose reasons for its ruling.

"We are very pleased with the panel's decision, as well as with what has been quite a favorable success rate for these claims, in general," spokeswoman Shannon Bell said.

Grubman drew fire for touting WorldCom even as shares of the long-distance company, now MCI Inc. (MCIP), collapsed. Grubman, who helped Citigroup land many millions of dollars in investment banking fees, resigned under pressure in August 2002.

In the Sturm case, one of the largest of its kind filed against a Wall Street firm, the investor tried to demonstrate a direct link to Grubman and to prove that the research was flawed, according to a Wall Street Journal report on the panel's decision on Thursday.

New York and federal regulators settled with Grubman in April 2003, fining him $15 million and barring him for life from the securities industry.

Citigroup also at that time agreed to pay $400 million as part of a $1.4 billion settlement among 10 banks accused of issuing tainted research to help their firms win banking business.