Attorneys representing the small investors, each of whom lost less than $25,000 (£16,000) on WorldCom stock, delivered documents for the initial cases to the offices of the National Association of Securities Dealers in New York yesterday.
Robert Weiss, an attorney from the firm Hooper & Weiss, which represents the claimants, said the documents contained allegations that Salomon failed to disclose to investors the business ties between Salomon and WorldCom, as well as the personal and business relationship between Salomon's former telecom analyst, Jack Grubman, and WorldCom founder and former chief executive officer Bernard Ebbers.
Salomon Smith Barney said the company believed the claims were similar to others that have been filed and maintained the claims made against it are untrue.
"While we have yet to see the claims, we expect them to mimic other filings which, we continue to believe, are without merit," said Susan Thomson, a spokeswoman for Salomon Smith Barney.
Weiss said the documents filed yesterday were just the beginning in what could be a flood of thousands of individual arbitration cases brought against Citigroup and Salomon.
The purpose of the arbitration cases is to give small investors a chance to recover more of their original investment than would be possible in traditional class action suits.
The high-profile filing of thousands of separate arbitration claims would highlight the problem and help politicise the issue of requiring investors to engage in arbitration, he added.
While WorldCom is also culpable for misrepresenting its own financial standing, the company has declared bankruptcy and is not a promising target for those who are looking to recoup their original investments.
The same cannot be said of Citigroup, which said it has $1.5bn set aside for settling such claims.
"They have the money and the liability and they're going to have to pay," Weiss said.