New York ? Under pressure from regulators, Citigroup announced Wednesday that it was separating its stock research from its investment banking operation to eliminate potential conflicts of interest.

The nation’s largest financial institution has been under investigation along with other Wall Street firms for allegedly touting certain stocks to the public while also courting the companies as investment banking clients.

Citigroup said it was creating a new stock research and retail brokerage unit, to be led by Sallie L. Krawcheck.

“Sallie is a strong advocate for research quality and independence,” said Citigroup chairman and chief executive Sanford I. Weill. The organizational change “is a giant step forward for Citigroup’s continuing effort to rebuild investor confidence and provide our clients with the highest quality service.”

The unit will include more than 12,500 financial consultants and will operate under the Smith Barney name.

The announcement came the same day regulators had set as a deadline for reaching agreement with top brokerages on a proposal to make Wall Street stock analysis more independent.

Under discussion is creation of a special $1 billion pool, funded by large investment banks and brokerage houses, that would be used to finance independent stock researchers. The parties have agreed to that general framework, The New York Times said Wednesday.

Michael Mayo, a banking analyst at Prudential Securities, said Citigroup’s reorganization was a step in the right direction. “You can wonder, though, if it goes far enough to satisfy the regulators,” he said. “That’s really the issue.”

Citigroup rose 58 cents to $37.08 on the New York Stock Exchange.

In September, Citigroup paid $5 million to settle charges by the National Association of Securities Dealers that a former star telecommunications analyst, Jack Grubman, misled investors with his pronouncements on Winstar Communications Inc.

Citigroup did not admit to any wrongdoing, and Grubman is fighting the allegations.

Meanwhile, the NASD and New York Atty. Gen. Eliot Spitzer are looking into allegations that Citigroup researchers touted telecommunications stocks to help Citigroup get the companies’ investment banking business.