Mr Weill only reluctantly agreed to serve and was adamantly opposed to engaging in a public debate over his qualifications to do so Richard Grasso NYSE chairman

Mr Weill's name was in the frame to be one of six nominees to the 27-member board, and one of three tipped to represent investors.

But Eliot Spitzer, who has waged a public campaign against the misdeeds of the big banks during the stock market bubble of the late 1990s, said he was the wrong man for the job.

"To put Sandy Weill on the board of the exchange as the public's representative is agross misjudgement and a violation of trust," he told the New York Times.

Settlement

Mr Spitzer, who also said he was "apoplectic" when he found out Mr Weill was going for the job, was responsible for a lawsuit which took $1.4bn off New York's big banks last year.

Citigroup's share of the settlement was $400m.

The deal arose from accusations that investments banks - including Citigroup units such as Schroder Salomon Smith Barney - slanted their supposedly independent research so as to win lucrative business from the firms they were reviewing.

In some cases, star analysts such as SSSB telecoms guru Jack Grubman told investors that stocks were due to ride sky-high - while writing emails to colleagues warning them that the companies in question were destined to crash and burn.

The final stage of the settlement, a reorganisation of the banks' research outfits to render them more independent, has yet to be completed, Mr Spitzer's spokesman said.

'Qualifications'

Although neither Citigroup nor Mr Weill were ready to comment on the decision to pull out, NYSE chairman Richard Grasso said Mr Weill had dropped out because of Mr Spitzer's comments.

Mr Weill "only reluctantly agreed to serve and was adamantly opposed to engaging in a public debate over his qualifications to do so," he said in a statement.