In a move sure to get under Eliot Spitzer's publicity-lovin' skin, Citigroup(NYSE: C) announced today it's sending its stock analysts to one corner of the ring and investment bankers to the other. Anxious to move beyond its legal messes, the company released the news at the same time Street bigwigs reportedly reached a settlement with Spitzer and the SEC.

Under the plan, Citigroup will create a new division to house its stock research and private client brokerage business. Known as Smith Barney, the group will drop the "Salomon" and any associations with the Liar's Poker way of conducting business. Smith Barney should be fully independent from Citigroup's investment banking and underwriting business.

Citigroup chief Sandy Weill tapped the beyond-reproach Sallie Krawcheck to head up Smith Barney. Hailing from the independent boutique research firm Sanford C. Bernstein, where she was chairman and chief executive officer, Krawcheck will report directly to Weill. She'll get the job done and has much more credibility and visibility than anyone he could have promoted from within Citigroup.

Krawcheck has been a vocal critic of the traditional coziness of banking and research. She was instrumental in growing Sanford's business, and is a staunch believer in the value of independent research. When asked in an interview with Fortune magazine this past summer if she'd consider adding underwriting business at Sanford to increase revenues, she said, "They're going to have to take me out of here on a board, toes up, before that happens. No way."

What this means for Citigroup in relation to the proposed settlement remains to be seen. Some regulators still want a move to freestanding research firms, rather than divisions within the overall company, but that possibility now seems remote. Most likely, the companies involved will pay to fund an oversight board to regulate research and ensure its independence. Meetings continue today to reach a final solution, and at first glance, Citigroup's announced separation won't affect the settlement.

Settlement or no, we applaud Citigroup's move toward separation. We're waiting now for other Street heavyweights to do the same -- but we're not holding our breath.